The shops have been sold to Modella Capital, which owns Hobbycraft, for £76m. Modella won the final stage of the auction process after the business was put up for sale in January.
Modella Capital will take over 480 stores and 5,000 staff. The deal will see the WHSmith name erased from town centres to become TGJones.
The new name has been made up and deliberately styled to echo the historic WHSmith brand. WHSmith was founded in London in 1792 by news vendors Henry and Anna Walton Smith. As well as selling newspapers, magazines and books, it also sells sweets and snacks, stationery and art supplies.
The WHSmith brand is not included in the sale and the group’s travel divisions will continue to trade under the WHSmith brand across 32 countries, including at airports, hospitals and train stations in the UK.
While profitable and cash generative, the UK high street business had become an increasingly smaller part of the WHSmith Group.
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Figures show that 75% of the group’s revenue and 85% of its trading profit came from its travel business in the last financial year. The brand has developed its ‘Travel Essentials’ proposition at its travel outlets, including a higher proportion of food and drink, health and beauty and tech accessories.
‘Pivotal moment for WHSmith’
Carl Cowling, WHSmith’s 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.
“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.”
Russ Mould, investment director at AJ Bell, said: “Talk there were only a few parties left in the race to buy WHSmith’s UK high street stores implied the retailer might have to accept whatever it was offered.
“Ahead of the deal with Modella, there was speculation it would get £100m for the stores. A £76m enterprise value is disappointing, yet something is better than nothing for WHSmith.
“A potential reason why the deal was priced below expectations is the fact the buyer isn’t getting the WHSmith brand. There was speculation the name would be included in the deal, as the brand strength was a major asset to anyone looking to keep the stores running as per normal. Instead, the WHSmith name will be retained for the UK travel stores and sites in hospitals.”
