WHSmith has on Friday announced the sale of its UK high street business to Modella Capital, in a move to concentrate on its higher-growth travel retail markets.
The deal, which values the high street business at £76 million on a cash and debt-free basis, will see WHSmith receive gross cash proceeds of £52 million.
The sale marks a significant strategic shift for WHSmith, allowing the management to focus on the substantial growth opportunities within its key travel markets. Over the past decade, WHSmith has increasingly focused on its travel business, which in the last financial year, accounted for 75 per cent of the group's revenue and 85 per cent of its trading profit.
“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,” Carl Cowling, group chief executive, commented
The travel business operates across 32 countries and includes major airport locations, hospitals, and rail stations, both in the UK and internationally. The company will continue to trade under its historic 233-year-old brand name within its travel divisions.
“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," said Cowling.
Under the new ownership, the high street business will be led by Sean Toal, the current CEO of the high street business, and will eventually rebrand as TGJones, following a short transitional period operating under the WHSmith brand. All stores, colleagues, assets, and liabilities of the high street business will transfer to Modella Capital as part of the transaction.
Retailers association welcomes new chapter for WHSmith high street stores
The British Independent Retailers Association (Bira) has welcomed the announcement, while expressing cautious optimism for the future of these important retail spaces.
“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,” Andrew Goodacre, Bira CEO, said.
“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.
“As champions of retail diversity and vibrant high streets, Bira sees potential in this transition. We hope Modella Capital will bring fresh ideas and renewed investment to these locations.
"The high street continues to face significant challenges, but this acquisition shows there is still value and opportunity in town centre retail when approached with the right business model and investment.”
