WH Smith has confirmed the sale of its high street operations to Hobbycraft owner, Modella Capital, in a £76m deal.
After a “short transactional period” the new owner said that the high street stores would be renamed TGJones.
The reason is because the £76m deal doesn’t include the WH Smith brand, which will continue to be used by WH Smith PLC’s Travel division at airports, hospitals and railway stations.
WH Smith PLC explained that now 75% of its revenue and 85% of its trading profit came from its travel business and exiting from the high street would enhance its growth and profits. It now has 1200 travel stores across 32 countries.
“As we continue to deliver on our strategic ambition to become the leading global travel retailer, this is a pivotal moment for WHSmith as we become a business exclusively focused on Travel,” said Carl Cowling, Group Chief Executive.
“With the ongoing strength in our UK Travel division, and the scale of the growth opportunities in both North America and the Rest of the World, we are in our strongest ever position to deliver enhanced growth as we move forward as a pure play travel retailer.”
Cowling added that its high street business, which includes 480 stores and 5000 staff, was still profitable
“As our Travel business has grown, our UK High Street business has become a much smaller part of the WHSmith Group. High Street is a good business; it is profitable and cash generative with an experienced and high-performing management team. However, given our rapid international growth, now is the right time for a new owner to take the High Street business forward and for the WHSmith leadership team to focus exclusively on our Travel business. I wish the High Street team every success.
“As we look forward as a simplified, travel-focused Group, I am excited about the Group’s future prospects. With a clear strategy, a strong balance sheet, and operations in high growth and attractive markets, we are well-positioned to generate substantial growth and value for all stakeholders.”
The high street operation will now become part of Modella Capital, led by Sean Toal, currently CEO of the High Street business.
The acquisition is expected to complete later this year.
The deal does not include the Group’s personalised online greeting card business, funkypigeon.com. WH Smith PLC said it would be exploring strategic options for this part of the Group, including a possible sale.
“It is always a moment of sadness when a historic brand leaves the high street, especially when like WHSmith they bring books to communities with few other means to access them. Through their commitment to selling books and extensive charity work, WHSmith has for centuries served communities around the UK – many of which have lost access to public libraries in recent years,” said Meryl Halls, Managing Director of the Booksellers Association.
“Alongside continuing our existing relationship with WHSmith Travel, we intend to work with TGJones to continue WHSmith’s legacy of promoting reading by keeping books in their shops, on the high street and in the hands of local readers.
“We also encourage the government to see this situation as an indication that further high street investment is essential to the health and longevity of our town centres. Positive actions such as business rates reform, tenant protection and creative partnerships to reinvigorate our retail and leisure spaces will help keep high streets vibrant, diverse and viable locations for bookshops – from national chains to local independents – to thrive.”
WH Smith was founded in 1792, opening its first bookstall in 1848. By 1854 it had become the principal newspaper distributor in the country, acquiring distribution warehouses in Manchester and Liverpool.
In 1973 it adopted what became its iconic brown and orange identity and a decade later it acquired Paperchase and Our Price Music.
