WHSmith sale: What now for 480 high street shops under ‘unknown’ TGJones brand?

As the WHSmith name is poised to disappear from the high street, retail industry leaders are eyeing “fresh ideas and investment” from the chain’s new owner.

The hope for a revival comes after the historic newsagent, bookseller and stationer, whose roots stretch back to 1792, agreed to sell its UK high street business to Hobbycraft owner Modella Capital in a deal valuing it at £76 million. The stores will eventually rebrand as TGJones.

The sale does not include the retail stalwart’s travel locations, encompassing outlets in airports and railway stations, nor the WHSmith brand.

Several of the WHSmith high street branches house Post Office counters, including this store in Dunfermline, Fife. Picture: Scott Reid

Some 480 stores and 5,000 staff working for the high street businesses will move under Modella Capital’s ownership as part of the agreement. The WHSmith travel division, which has become the key focus of the group in recent years and also includes stores within hospitals, will not be changing. That makes up the bulk of its sales and profits, and has grown to more than 1,200 stores across 32 countries.

Andrew Goodacre, chief executive of the British Independent Retailers Association (Bira), said: “The sale of WHSmith’s high street business to Modella Capital represents a significant change for the UK retail landscape, but importantly, it appears these stores will continue to operate under new ownership rather than close entirely.

“We welcome Modella Capital’s investment in these high street locations and hope this will secure the future of these stores, protect valuable jobs, and maintain essential services like Post Office counters that many communities rely upon. We hope Modella Capital will bring fresh ideas and renewed investment to these locations.”

WHSmith’s group chief executive Carl Cowling said the high street shops have become a “much smaller part” of the business.

“High street is a good business; it is profitable and cash generative with an experienced and high-performing management team,” he added. “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.”

Modella Capital specialises in investing in retailers. It has previously put money into chains including Paperchase and Tie Rack. In August, it snapped up arts and crafts retailer Hobbycraft for an undisclosed sum.

Russ Mould, investment director at AJ Bell, noted: “Ahead of the deal with Modella, there was speculation it would get £100m for the stores. A £76m enterprise value is disappointing, yet something is better than nothing for WHSmith.

“The sites will be rebranded TGJones, a name that currently means nothing to shoppers. Modella faces the risk of being lost in the crowd on the high street, surrounded by vape shops and discount retailers, none of which command shopper loyalty.

“The WHSmith brand was the key reason why its stores managed to stay alive in a crumbling high street environment. Shoppers knew they could depend on the retailer for certain items and they kept coming back for more. Take the brand away and there is a major risk that footfall to these stores plummets under the TGJones name.

“TGJones will have to do something remarkable on pricing to lure in the punters, or Modella might simply be using that name as a temporary banner before striking deals to turn individual stores into alternative use.”

Earlier this year, WHSmith raised the “for sale” sign on the high street part of the 233-year-old empire. Responding to press speculation, the company confirmed that it was “exploring potential strategic options” for what it stressed was a “profitable and cash generative” part of the business.

Post Office counters have been added to scores of WHSmith high street branches since 2007, and the uncertainty surrounding the future of the retail operation will have had regular users of postal services concerned. In some cases, those Post Office outlets have been relocated to the shops following the closure of the only postal office in town.

A very recent development has involved Toys ‘R’ Us opening concessions in a number of WHSmith stores, marking the return of the toy brand’s physical presence in the UK after its own outlets closed in 2018.

Why WHSmith's 233-year history may be about to change forever