WH Smith has announced the sale of its UK high street business to Modella Capital for £76 million, marking a significant shift in the retailer’s focus towards its travel operations. This decision comes as WH Smith aims to concentrate on its rapidly expanding travel retail division, which has become the primary revenue driver for the company.
Key takeaways
- WH Smith sells its high street business to Modella Capital for £76 million.
- The sale includes approximately 480 stores and 5,000 employees.
- The WH Smith brand will not be included in the sale and will continue to operate in travel retail locations.
- The high street stores will be rebranded as TGJones.
- The transaction is expected to complete in the final quarter of the current fiscal year.
The sale details
The deal, which is set to be finalised later this year, will see WH Smith’s 480 high street stores transition to Modella Capital, the owner of Hobbycraft. The current head of WH Smith’s high street division, Sean Toal, will lead the new entity. The stores will initially operate under the WH Smith brand before rebranding to TGJones.
Carl Cowling, WH Smith’s Group CEO, described the sale as a pivotal moment for the company, allowing it to focus exclusively on its travel business, which has shown significant growth potential. Currently, around 75% of WH Smith’s revenues and 85% of its trading profit come from its travel operations, which include over 1,200 stores in airports, train stations, and hospitals across 32 countries.
Implications for the high street
The sale signifies the end of an era for WH Smith, a brand that has been a staple of British high streets since the Victorian era. The new owner, Modella Capital, has expressed its commitment to maintaining the existing Post Office outlets within the stores while also introducing new product ranges. However, analysts have raised concerns that the sale could lead to store closures, as Modella may seek to streamline operations and focus on profitability.
Future of WH Smith
As WH Smith pivots towards travel retail, the company aims to enhance its growth strategy by optimising its operations in high-traffic areas. The travel division has benefited from increased consumer spending on travel-related products, and the company plans to capitalise on this trend by improving passenger spend and expanding its market presence.
The high street business, while profitable, has faced challenges in recent years due to competition from budget retailers and online shopping. The transition to TGJones may take time to resonate with consumers, many of whom will mourn the loss of the iconic WH Smith name from the high street.
In conclusion, WH Smith’s decision to divest its high street operations marks a significant strategic shift as the company focuses on its travel retail business, which has become the cornerstone of its revenue generation. The future of the high street stores under Modella Capital remains uncertain, but the sale represents a new chapter for both WH Smith and the UK retail landscape.
Sources
- WHSmith sells high street business to Modella CapitalToy World Magazine, Toy World Magazine.
- WH Smith sells high street business to Hobbycraft owner for £76m, This is Money.
- WH Smith name to disappear from High Street after sale, BBC.
- WH Smith to sell UK high street business for nearly $100 million, Reuters.
- WH Smith offloads high street shops for £76m – Daily Business, Daily Business.
