The iconic WH Smith brand is set to vanish from British high streets following its agreement to sell its high street business to Modella Capital, the owner of Hobbycraft, for £76 million. This strategic move allows WH Smith to focus on its more lucrative travel retail operations, which have seen significant growth in recent years.
Key takeaways
- WH Smith sells its high street business for £76 million to Modella Capital.
- The sale includes around 480 stores, which will be rebranded as TGJones.
- WH Smith aims to concentrate on its travel retail sector, which generates the majority of its revenue.
- The high street business remains profitable, employing approximately 5,000 staff.
The sale details
The sale marks a pivotal moment for WH Smith, which has been struggling with declining sales in its high street operations. The company has been in discussions with potential buyers since January, ultimately deciding to divest its high street business to focus on the booming travel sector.
Modella Capital, the new owner, plans to retain existing products and services, including the Post Office and Toys "R" Us, while gradually introducing new product ranges. The rebranding to TGJones signifies a new chapter for the stores, which have been a staple in British shopping culture for over 230 years.
WH Smith’s strategic shift
WH Smith’s travel business has become the cornerstone of its operations, contributing approximately 75% of the company’s revenue and 85% of its trading profit. The travel sector, which includes over 1,200 stores in airports and train stations across 32 countries, has benefited from increased consumer spending on travel-related items such as books, snacks, and electronics.
Carl Cowling, WH Smith’s CEO, stated that the sale allows the company to concentrate on capturing growth opportunities in the travel market, which is expected to expand significantly over the next 25 years. The focus will be on increasing passenger spend and optimising store space in high-traffic areas.
Future of the high street business
Despite the sale, the high street business remains profitable and cash-generative. Analysts have expressed concerns that the rebranding could lead to the closure of nearly half of the stores, as Modella Capital seeks to streamline operations. WH Smith has also indicated that it will explore strategic options for its online greeting card business, funkypigeon.com, which is not included in the sale.
Conclusion
The divestment of WH Smith’s high street business marks the end of an era for a brand that has been synonymous with British retail for centuries. While the sale allows WH Smith to focus on its travel operations, it also raises questions about the future of high street retail in the UK. As consumer habits continue to evolve, the impact of this sale will be closely monitored by industry analysts and the public alike.
