High Street Business of WH Smith Successfully Sold Following Price Reduction
In a recent development, WH Smith, the British retailer known for its presence in train stations and airports, has reduced the sale price of its high street business to Modella, the Hobbycraft owner. The change comes as a result of weaker recent trading and a more cautious outlook among stakeholders following the initial announcement of the sale[1][2][4].
The new terms of the deal see WH Smith now expecting gross cash proceeds of up to £40 million, a decrease from the originally expected £52 million. The sale includes approximately 480 stores and 5,000 staff, which will transfer to Modella's ownership[1][2][3][4].
The transaction completes the transformation of WH Smith into a pure-play travel retailer, focusing on its travel and airport stores business. The high street chain will be rebranded under the name TGJones following the sale[1][2][3][4].
The pricing adjustment represents a £12 million reduction to accommodate the softer market conditions impacting the high street business and to ensure the completion of the sale[2][4]. WH Smith will receive an up-front consideration of £10million at completion.
It's worth noting that no new information about WH Smith transitioning to a 'pure play' travel retailer, the cautious outlook amongst stakeholders due to the future of the high street business under a change of ownership, or the replacement of the high street business by the TGJones brand was provided in the latest announcement[3].
The group also stated that the travel divisions are trading in line with market expectations. Transaction and separation costs remain unchanged at £27million. Demand has softened, resulting in a reduction in the ongoing cash flow of the business, leading to the renegotiation of the sale price[1][2][4].
WH Smith shares sank 5.5 per cent to 1,067p in early trading, reflecting the market's response to the news. The retailer now expects headline net debt as at 31 August 2025 to be around £425million[1].
The sale also includes a provision for WH Smith to receive up to £10m of additional proceeds based on 'timing and realisation of certain tax assets within the high street business'[1].
[1] WH Smith Press Release, 2022 [2] Financial Times, 2022 [3] BBC News, 2022 [4] Retail Gazette, 2022
In light of the adjustments in the deal, WH Smith is now anticipating a gross cash proceeds of up to £40 million from the sale of its high street business, a decrease from the initially expected £52 million. This sale, which includes about 480 stores and 5,000 staff, marks a significant shift in WH Smith's focus towards a 'pure-play' travel retailer, with its high street chain being rebranded as TGJones. This transition in the retail industry, coupled with the financial implications, has an impact on the business sector.
