WH Smith agrees to sell UK high street shops and is set for rebrand

WH Smith has agreed to sell its UK high street chain to Hobbycraft owner Modella Capital in a deal valuing it at £76 million, and will eventually rebrand as TGJones.

The sale does not include the retailer’s travel locations, such as shops in airports and train stations – nor the WHSmith brand.

All the approximately 480 stores and 5,000 staff working for the high street businesses will move under Modella Capital’s ownership as part of the deal.

The deal will see the WH Smith name disappear from high streets and replaced by brand TGJones.

The travel division, which has become the key focus of the group in recent years and also includes shops in hospitals, will not be changing.

As our travel business has grown, our UK high street business has become a much smaller part of the WHSmith Group

That makes up the bulk of its sales and profits, and has grown to more than 1,200 stores across 32 countries.

High street shops have become a “much smaller part” of the group, its boss said.

Group chief executive Carl Cowling said: “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.

“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.”

The sale to Modella Capital represents an enterprise value of £76 million on a cash and debt-free basis.

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.

The WH Smith sale follows a period of uncertainty where a number of potential buyers were believed to be in the running to snap up the historic chain.

It is understood that private equity groups Hilco and Alteri were among parties to raise interest over a possible takeover move, after WH Smith launched the process late last year.