The WH Smith brand will disappear from British high streets after more than two centuries, with the stores transferring to a new owner that hopes to revive the long-struggling business.
Investment firm Modella Capital has bought the network of about 480 stores and a support center in Swindon, WH Smith Plc said in a statement Friday. The WH Smith name — which will live on via the company’s lucrative travel division — is not included. Modella will rebrand the stores under the name TGJones.
Founded in London in 1792, WH Smith is one of the country’s best-known retailers selling books, newspapers, magazines and stationery. But demand has fallen as shopping habits change and amid tough competition, especially online. The unit has survived by aggressively cutting costs to offset falling sales.
The deal comes at a time when Britain’s retailers are grappling with higher costs from tax hikes as part of Chancellor of the Exchequer Rachel Reeves’ budget, even as sales picked up in the latest figures. Struggling UK discount retailer Poundland is also set to be sold as its owner focuses on its more profitable clothing and general merchandise brand Pepco.
The WH Smith deal “is a clear reflection of the structural pressures squeezing legacy high street retailers,” said Nicholas Found, head of commercial content at Retail Economics. “With falling footfall, rising business rates and wage inflation, the economics of the high street have become increasingly unforgiving, with many grappling to find relevance in a digital-first era.”
Offloading the high street stores will let WH Smith, led by Chief Executive Officer Carl Cowling, focus on its travel business. The retail network operates in major airports, hospitals and train stations in 32 countries, and contributes about three quarters of the group’s revenue.
High Street Presence
Still, Modella Capital talked up the prime location of many of the stores it is buying, and said it “believes strongly in the future of the high street.” The owner of Hobbycraft and The Original Factory Shop reportedly beat competition from Apollo-backed firm Alteri, which owns the Bensons for Beds chain.
Modella’s purchase is likely to bolster the argument that WH Smith could have done more with its high street business, which became the butt of jokes as the company was accused of investing too little to maintain its appeal. Photos of dirty carpets and other examples of disrepair often circulate on social media.
The deal has an enterprise value of £76 million ($98 million) and is slated to be completed in the final quarter of WH Smith’s current financial year. That “modest” price likely reflects short store leases and the fact the WH Smith brand was not included, Goodbody analyst Fintan Ryan said in a note.
WH Smith shares fell as much as 4.4 per cent in London on Friday.
Modella said the name TGJones has the same “sense of family” and reflects the stores being at the heart of the high street. Sean Toal, chief executive officer of the high street business, will continue in his role under the new ownership.
Store collaborations with the Post Office and Toys “R” Us, part of WH Smith’s bid to encourage footfall, will continue under Modella.
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