Swindon & Wiltshire News
WHSmith to disappear from high streets after £76 million sale
A ubiquitous name in Britain’s town centres will disappear after Swindon-headquartered retailer WHSmith agreed to sell its high street business to Hobbycraft owner Modella Capital for £76 million.
Modella says it will rebrand the 480 shops as TGJones – a name invented to echo the historic brand.
Under the deal, WHSmith will keep its 1,200 lucrative travel hub shops – those found at airports and major railway stations – and the brand itself.
In the last financial year, 75 per cent of WHSmith’s revenue and 85 per cent of its trading profit came from its travel business.
The 5,000 staff from WH Smith’s high street stores will transfer to Modella Capital as part of the transaction.
The sale was announced back in January.
WHSmith group chief executive Carl Cowling told investors this morning: “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.
“We have a highly successful travel business, operating in fast growing markets in 32 countries and we are constantly innovating to deliver strong returns and meet our customers’ and partners’ needs. 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.
“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.”
WHSmith’s intention to grow its travel business was explained to Swindon business leaders in 2019, at the annual conference of Swindon and Wiltshire Local Economic Partnership.
Steve Clarke, who was in his last week at the firm as CEO, told delegates how WHSmith had refused to take on Amazon head-to-head for online sales. Instead, it had concentrated on selling products to customers who couldn’t order online – in transport hubs like airports and railway stations, and in hospitals.
Even before the pandemic, high street stores were struggling. “The last ten to 15 years has been a turbulent time in UK retailing – and at the minute it is brutal,” he said.
“In 2000 everything changed. Supermarkets started selling non-food items, and the internet came along. Suddenly we had more and more competitors.
“When I joined WHSmith in 2004 we could buy CDs cheaper from supermarkets – who were selling at cost price – than we could from our own suppliers.”
He said market share diminished further with the advent of online shopping.
“(Amazon) started with our categories first: books, then CDs. All the pain that retailers are going through now because shopping habits have changed, we went through 15 years ago.
“Rather than spend hundreds of millions of pounds on a website, we invested in train stations and airports, both here and outside the UK,” he said.
