WH Smith is to sell its 480 retail stores to the Hobbycraft owner, Modella Capital, in a deal worth £76m, and has confirmed that the 233-year-old brand will disappear from the high street after a “short transitional period”.
Under the terms of the deal, the high street business, which employs 5,000 staff, will be rebranded as TGJones, while WH Smith is retaining its brand for its travel shops.
The books and stationery retailer, which will keep its almost 1,300 travel stores and online business, said that it was also looking at “strategic options” including a sale of its digital greetings card business Funky Pigeon.
Last month, industry experts predicted that at least half of the 480 WH Smith high street stores – which sell newspapers, books, stationery, cards and gifts – could be closed after a sale, raising the prospect of sweeping job cuts.
The deal gives the WH Smith high street business an enterprise value of £76m on a cash and debt-free basis.
While WH Smith says it will realise £52m in cash proceeds, it will pocket only £25m after “transaction and separation costs”.
Carl Cowling, the group chief executive at WH Smith, said: “As we continue to deliver on our strategic ambition to become the leading global travel retailer, this is a pivotal moment for WH Smith as we become a business exclusively focused on travel.
“As our travel business has grown, our UK high street business has become a much smaller part of the WH Smith 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.”
Modella, which acquired Hobbycraft last year and also owns The Original Factory Shop chain, said that the new TGJones name for the chain has been chosen to give the same “family” feel as the venerable WH Smith brand.
“TGJones feels like a worthy successor to the WHSmith brand,” said a spokesperson. “Jones carries the same sense of family and reflects these stores being at the heart of everyone’s high street.”
The company, which runs 800 stores under the various brands it owns including Create & Craft and Crafter’s Companion, said that it was “very much business as usual” while it looked to “define and execute” a strategy for the retailer and introduce new offerings.
In January, the Communication Workers Union (CWU) raised fears that a sale could see some communities become “postal deserts”, because 200 post offices were operated in the retailer’s shops.
after newsletter promotion
However, on Friday Modella said that it intended to “keep all the same products and services, including the Post Office and Toys R Us, which operates concessions within WH Smith stores.
Sean Toal, the chief executive of the WH Smith high street business, is moving to Modella to run the business.
“I am delighted that we have agreed a sale with Modella Capital who, I know, will be supportive new owners,” said Toal.
The business was put up for sale in January. Modella and Bensons for Beds owner Alteri Investors were the final two bidders being considered, Sky News reported this week.
WH Smith said that, in its last financial year, three-quarters of group revenues and 85% of trading profit were derived from its travel business, which operates in 32 countries.
In the year to the end of August, the travel operation reported £1.46bn in revenue and £189m in profit.
Source: www.theguardian.com