WHSmith brand to disappear from UK high streets as sale agreed
The retailer has sold its high street branches, but retains its WHSmith travel retail proposition, which now makes up 75% of its revenue.
WH Smith has agreed to sell its UK High Steet business to Hobbycraft owner Modella Capital as it announces a “focus on higher growth travel retail markets”.
This means the WHSmith brand will disappear from UK high streets, with the new owner having acquired all stores, colleagues, assets and liabilities of the chain, but not the brand. These stores will rebrand to TGJones.
WH Smith says the £76m sale “will allow management to concentrate on capturing the substantial growth opportunities in its key travel markets with a clear focus on driving shareholder value”.
Though the WHSmith brand will disappear from the high street, the group’s travel retail business will continue to use the WHSmith name. The travel retail business currently operates 1,200 stores across 32 countries, including airports, hospitals and rail stations in the UK.
The business has been increasing its focus on travel in recent years. In the last financial year, 75% of revenue and 85% of trading profit came from the travel arm.
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The retailer says its customer offer in travel is “increasingly different from that of its UK high street business”, as it has developed its ‘travel essentials’ range with food, drink, health, beauty and tech products.
The sale also does not include funkypigeon.com, the group’s online greeting card business.
According to YouGov BrandIndex, the WHSmith’s brand index score, which is a measure indicating overall brand health, has reduced by a statistically significant 1.7 points to 13.6 in the past year, with its value perception also reducing by 1 point to 3.6, and awareness significantly dropping by 1.3 to 91.3.
Its consideration has also reduced by a statistically significant 2.4 in the past year to 22.7, though purchase intent has no change.
WH Smith’s group CEO, Carl Cowling, describes the sale as a “pivotal moment”, and recognises that the “UK high street business has become a much smaller part of the WH Smith group”, despite it still being “profitable and cash generative”.
“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 every success,” adds Cowling.
There has been speculation about a potential sale of WHSmith for months, with HMV owner Doug Putman previously reported to have been in talks to buy the high street stores.
The transaction is expected to be completed in the final quarter of the group’s current financial year. Commenting on the sale, Globaldata lead retail analyst Zoe Mills describes Modella Capital as a “good fit” for the high street stores. However, she raised the loss of the brand name as a potential barrier for the new owner.
“One significant challenge for its new owner will be the loss of the WHSmith name, as this is not included in the sale. Given its long history and the affection it is held in by consumers, it is not clear how easily a transition to TGJones will be received,” she says.
