The new private-equity owners of rebranded WH Smith shops are set to close 150 branches, with hundreds of jobs at risk.
The owners, Modella Capital, launched a restructuring plan on Wednesday to rescue the ailing TG Jones business, with the store closures dealing yet another blow to the high street.
The high-street arm of WH Smith was bought last year by Modella for £40million, and rebranded as TG Jones. WH Smith retains its travel retail business, seen in airports and train stations.
Modella blamed the restructure on being ‘forced’ to ditch the household brand name WH Smith by its parent company.
The rebrand ‘negatively impacted consumer awareness’ despite the fact it had made improvements to the business, according to Modella.
It also blamed the challenging business climate on the Chancellor, Rachel Reeves.
TG Jones is set to close up to 150 of its 480 stores and told its staff to expect redundancies. TG Jones employs 5,000 people.
WH Smith’s sales have struggled for years before Modella Capital bought the high-street division.
The new private-equity owners of rebranded WH Smith shops are set to close 150 branches, with hundreds of jobs at risk
The first stores will be informed of closures and job losses on Thursday morning, according to the Financial Times.
Modella said in a statement that the ‘decision has not been taken lightly…[and] the survival of this iconic 234-year-old business is our imperative’.
Over the last 18 months Modella has bought numerous distressed retailers with varying success.
TG Jones is the third high street chain it bought that has since run into serious financial trouble in the space of just a year.
It said it planned to expand WH Smith’s retail operation to more than 500 stores as well as opening hundreds of Toys R US and Hobbycraft concessions.
It also attempted to revitalise The Original Factory Shop and Claire’s Accessories – but both retailers were put into administration earlier this year.
It was just months after Modella took them over and nearly 2,500 people lost their jobs as a result.
To save the rebranded WH Smith, the private equity firm set out its plan on Wednesday to slash rents on stores trading under the name TG Jones.
Landlords of the stores will be forced to accept long-term rent holidays and steep rent cuts or face the business going bankrupt.
For landlords on a ‘rent holiday’ it would mean they would receive no rental income at all for months or years. If landlords refuse, there could be mass closures and job losses for TG Jones branches.
The plan requires the approval of three quarters of creditors and landlords to be implemented but the High Court could push through the deal if the alternative would be administration.
The restructuring plan is set to be heard in court at the end of June.
