Dozens of former WH Smith stores face closure, putting thousands of jobs at risk | Retail industry
Dozens of former WH Smith stores are likely to close, putting thousands of jobs at risk under a radical restructuring plan by new owners who are rebranding the stores as TG Jones.
Investment company Modella Capital, which bought WH Smith’s chain of 480 high street stores for £76 million last year, blamed “weak consumer spending” when announcing the plan to homeowners on Wednesday.
According to The Telegraph’s initial report, eight of the chain’s remaining 450 stores will close immediately, while Modella is demanding a 100% rent holiday for around 100 more stores.
The company is also seeking a 5% rent reduction on hundreds more stores for a year, according to a document seen by the Guardian; Beyond this period, cuts will be made between 15% and 75%. Shops could close if landlords refuse rent holidays and cuts.
When Modella bought the chain, which employs 5,000 staff, stores were renamed under TG Jones’ fictitious “family” brand name, ending 233 years of the WH Smith name on the British high street.
On Wednesday, Modella said rising costs and geopolitical events had also contributed to TG Jones continuing to make losses, while acknowledging that the name change had also affected trading.
The restructuring plan must be approved through a vote of creditors and a court process.
A TG Jones spokesperson said: “This decision has not been taken lightly. While we continue to believe in the strength of its core business, TG Jones, along with many other bricks-and-mortar retailers, has experienced extremely challenging trading conditions over the past year.
“Weak consumer spending and cost of living pressures, combined with rising operating costs as a direct result of government policy and recent geopolitical events, mean the company as a whole continues to make a loss.
“WH Smith’s forced name change also had a negative impact on consumer awareness, despite the offering improving.”
The plan was stated to be “a key part of the company’s turnaround”, in which Modella will invest £35 million. It said the restructuring was “designed to preserve the important core of the store space and create a stronger, more sustainable business that can continue to serve customers for years to come.”
But Modella always planned to close dozens of TG Jones stores and create a scaled-back chain of 350 stores on each block under its deal with parent company WH Smith, which expired in June, industry insiders said.
“That was the intention all along,” the source said. “Nobody wants almost 500 sites [in the UK].” Turning the business around will be difficult in the current retail environment, the source added, adding there may be a “one-in-three chance” of creating an offer that will attract enough customers.
TG Jones is likely to struggle to get support from landlords due to difficulties following the collapse of fellow Modella-owned chains Claire’s and The Original Factory Shop, which has closed all its stores with the loss of around 2,500 jobs. Modella’s Hobbycraft chain also closed several stores last year as part of a restructuring.
WH Smith’s travel stores, which are owned by the listed group and which were not part of last year’s deal, continue to trade unaffected.
Originally founded in 1792 in London’s Little Grosvenor Street by Henry Walton Smith and his wife Anna, WH Smith has grown to become one of the UK’s best-known retail chains. It grew rapidly by establishing a newspaper distribution business with the expansion of the railway network in the 19th century. He opened his first retail travel store at Euston station in London in 1848.
