Up to 150 former WH Smith locations are expected to shut down, placing thousands of jobs in jeopardy as part of a major restructuring initiative by their new owner, who has rebranded the stores as TG Jones.
Modella Capital, the investment firm that acquired WH Smith’s network of 480 high street outlets for £76 million last year, attributed this decision to “weak consumer spending” while presenting their plan to landlords on Wednesday.
Immediately, eight of the remaining 450 stores will close, and Modella is requesting complete rent holidays for approximately 100 additional locations, as first reported by the Telegraph.
Furthermore, the company is seeking a 75% reduction in rent for several hundred other stores for the next year, with potential cuts ranging from 15% to 75% thereafter, as outlined in a document reviewed by the Guardian. If landlords do not agree to these rent adjustments, more closures could follow.
Employees were informed that the closure of between 100 and 150 stores is anticipated as a result of these changes.
When Modella took over the chain, which employs around 5,000 individuals, the stores were rebranded under the fictional family-oriented name TG Jones, marking the end of the WH Smith brand’s 233-year legacy on British high streets.
On Wednesday, Modella indicated that escalating costs and global events have furthered TG Jones’s financial losses, while acknowledging that the rebranding has adversely affected sales.
The proposed restructuring plan is subject to approval from creditors and must go through a court process.
A spokesperson for TG Jones stated, “This decision has not been made lightly. While we remain confident in the core business’s viability, TG Jones has faced extremely challenging market conditions over the past year, similar to many physical retailers.”
They noted that weak consumer spending and rising living costs, coupled with increasing operational expenses due to government policies and recent geopolitical developments, have resulted in continued financial losses for the company. The enforced name change from WH Smith has also diminished consumer recognition, despite improvements in the product offerings.
Modella emphasized that this plan is a crucial step in the company’s recovery strategy, which includes an investment of £35 million. The restructuring aims to safeguard the main portion of the store network and develop a more robust, sustainable business capable of serving customers for years to come.
However, industry experts suggest that Modella has always intended to downsize the TG Jones chain to around 350 stores once restrictions under the agreement with the parent company of WH Smith expire in June. “This has been the plan from the beginning,” a source mentioned, adding that maintaining nearly 500 locations in the UK is not feasible.
Turning the business around in the current retail environment is expected to be challenging, with estimates suggesting only a “one-in-three chance” of creating an attractive proposition to attract sufficient customers.
TG Jones may encounter difficulties in gaining backing from landlords, particularly given the recent failures of other Modella-owned brands, such as Claire’s and The Original Factory Shop, which have shut down entirely, resulting in approximately 2,500 job losses. Last year, Modella’s Hobbycraft chain also closed several stores as part of a restructuring effort.
In contrast, WH Smith’s travel stores, which were not included in last year’s acquisition and remain under the publicly traded group, continue to operate without disruption.
WH Smith was founded in 1792 by Henry Walton Smith and his wife, Anna, in Little Grosvenor Street, London. The company expanded to become one of the UK’s most recognizable retail brands. It experienced significant growth in the 19th century by establishing a newspaper distribution business alongside the expansion of the railway system, and it opened its first retail travel store at Euston Station in London in 1848.
