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WHSmith has agreed to sell its UK high street chain to investment firm Modella Capital in a deal valuing £76million. The stores will eventually rebrand as TGJones – meaning the WHSmith name will disappear from town centres.
However, the struggling books and stationery retailer will keep hold of its more profitable travel locations, so shops in airports and train stations. WHSmith has around 500 high street stores in the UK compared to its over 1,200 travel stores across 32 countries. Modella Capital, which is known for snapping up troubled retailers and previously acquired Hobbycraft and The Original Factory Shop, was one of two remaining parties that were bidding for WHSmith.
WHSmith had reportedly been considering offers from Modella Capital and Alteri Investors. It comes after WHSmith confirmed earlier this year that it was considering a “potential sale” of its high street stores to focus on its travel locations. The retailer had been slowly closing high street locations over the last few months.
Carl Cowling, Group Chief Executive, 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. 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.
“Our travel business currently accounts for around 75% of the group’s revenue and 85% of its trading profit. 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.
“I wish the high street team everysuccess. As we look forward as a simplified, travel-focused group, I am excited about the Group’s future prospects. With a clear strategy, a strong balance sheet, and operations in high growth and attractive markets, we are well-positioned to generate substantial growth and value for all stakeholders.”
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