Hedge funds and speculators targeted WH Smith for short selling in July, leading to a 45% drop in shares after an accounting error was revealed. The retailer lowered its profit outlook due to an overstatement in earnings in its North America division.

Analysts point to mounting debt and global economic uncertainty affecting WH Smith’s stock. A financial review found a 30 million pound overstatement in expected trading profit, mainly due to early booking of supplier income in North America. The retailer now expects pre-tax profit to be 110 million pounds.

Entertainment ticket sales companies, luxury drinks companies, and semi-conductor manufacturers also saw significant stock borrowing for shorting purposes, according to Hazeltree’s Shortside Crowdedness Report. The report gathers data from 700 asset managers covering 15,000 global stocks.

Hedge funds like Citadel Advisors and Man Group disclosed bets on WH Smith, among other UK and European small-cap stocks, in August. WH Smith, after selling its UK high street business, has been rapidly expanding in North America and now expects lower pre-tax profit compared to analysts’ estimates.

WH Smith’s stock target prices have been cut as analysts highlight debt and economic pressures. The retailer’s financial review uncovered a 30 million pound overstatement in trading profit, mainly due to early booking of supplier income in North America. WH Smith now expects pre-tax profit to be 110 million pounds.

Read more at Yahoo Finance: Hedge funds picked WH Smith as a top short before share slump, Hazeltree data shows