In a £76 million deal, long-established high street chain WH Smith is to sell its 480 stores to Hobbycraft’s owner Modella Capital. High streets will no longer bear the familiar WH Smith brand as part of the move, and after a brief transition period, shops will become TGJones. This shift is a milestone in the history of the 233-year-old brand, which would only be linked to travel points such as airports, railway stations, and hospitals.
The sale affects around 5,000 workers, and the transition process is expected to be finished by June. Although WH Smith will still run almost 1,300 travel shops and its website, the website will no longer offer direct sales but will be a portal of information. Modella Capital has acquired WH Smith’s online trading business, which will be merged under the TGJones label. However, the deal does not include Funky Pigeon, the retailer’s digital greeting card service, which WH Smith is currently evaluating for potential sale or other strategic options.
Concerns have arisen regarding the fate of WH Smith’s high street locations, with industry experts previously suggesting that up to half of the 480 stores could face closure. This has sparked fears of widespread job losses within the retail sector. Nicholas Found from Retail Economics attributed growing pressures for conventional retailers, mentioning falling footfall, increased business rates, and wage inflation as major difficulties. He reiterated that numerous established brands are facing challenges in changing to the growing digital-first nature of consumers.
The deal puts a price tag on WH Smith’s high street businesses at £76 million on an asset-free basis. The group anticipates cash of £52 million from the transaction, though costs of dealing and separation will cut the total to £25 million.
Carl Cowling, WH Smith’s group chief executive, said the deal represented a turning point, cementing WH Smith’s commitment to the travel market. He accepted that although the high street division was profitable, the company’s quick expansion internationally required a fresh owner to drive the company forward.
Modella, which has acquired Hobbycraft and owns The Original Factory Shop, has a track record of investing in retail brands. It was also once involved with Ted Baker’s UK licensee. The firm has opted to use the name TGJones for the revamped stores, seeking to preserve the familiarity and heritage of WH Smith. A staff letter clarified that “Jones,” a recognized UK surname, had been chosen in order to convey a feel of family and continuity, consistent with WH Smith’s established reputation. The retailer’s blue-and-white color brand will also be maintained.
Modella has around 800 stores in different brands, such as Create & Craft and Crafter’s Companion. The company assured workers that business would go on as normal while new strategies and products are being formulated. WH Smith has said that common services like IT infrastructure will take up to a year to transfer under a formal contract.
The sale has sparked fear among postal service campaigners, as WH Smith already has 200 post offices inside its outlets. The Communication Workers Union (CWU) has already cautioned that such a sale would be such that some communities lose their proper postal services. Andy Furey, the CWU assistant secretary, raised doubt about WH Smith’s dedication to the high street and demanded guarantees about protecting employee rights and conditions under the new owners.
Modella has said that it intends to keep current services, such as the Post Office and Toys R Us concessions, in place while looking into opening up new product ranges. The emphasis of the company on craft-related goods indicates that further offerings in this area could be given priority in order to draw customers in.
Sean Toal, WH Smith’s high street chief executive, will move to Modella to run the business. In a vote of confidence in the transaction, Toal pointed to Modella’s backing of the business and its potential for future growth.
WH Smith first placed its high street division on the market in January, with Modella and Alteri Investors, which owns Bensons for Beds, being the last bidders. During the group’s last financial year, travel retail contributed 75% of group revenue and 85% of trading profits, highlighting the strategic move to focus on this sector.
This sale is the most recent in a string of major high street revamps, with the closures of brands such as Debenhams, Topshop, Woolworths, and Littlewoods from consumer changing tastes and business conditions. Although some of these retailers have survived as online-only brands, full rebranding of current shops remains quite uncommon. Historical precedents include River Island’s shift from Chelsea Girl in 1991 and Morrisons’ rebranding of Safeway stores in the early 2000s. Yet not all have been successful, as with Virgin Megastores, which was rebranded to Zavvi in 2007 before the chain eventually closed down.
The retail sector is under constant transformation as WH Smith begins this massive change, symptomatic of both the ongoing challenges high street businesses encounter as well as broader changes in consumer habits.
