WH Smith PLC (“WHSmith” or “the Group”) has agreed the sale of its UK High Street1
business to Modella Capital (the “Transaction”), creating a pure play global travel retailer.
Over the last decade, WHSmith has become a leading global travel retailer with over 1,200 Travel stores across 32 countries.
While profitable and cash generative, the UK High Street business has become an increasingly smaller part of the WHSmith Group. In the financial year ended 31
August 2024, 75% of the Group’s revenue and 85% of its trading profit came from its Travel business.
As the Group has successfully developed its Travel Essentials proposition, including a
higher proportion of food and drink, health and beauty and tech accessories, its customer offer in Travel is increasingly different from that of its UK High Street business.
The High Street business is profitable and cash generative. The business currently employs c.5,000 colleagues across c.480 stores in primary locations across the UK and from its Swindon based Support Centre.
All stores, colleagues, assets and liabilities of the High Street business will move under Modella Capital’s ownership as part of the Transaction.
Under this new ownership, the business will be led by Sean Toal, currently CEO of the High Street business.
The High Street business will operate for a short transitional period under the WHSmith brand whilst the business rebrands as TGJones.
The Group’s Travel divisions will continue to trade under the WHSmith brand.
The Transaction is expected to complete in the final quarter of the Group’s current fiscal year, with anticipated gross cash proceeds of ÂŁ36m at completion (subject to customary working capital adjustments based on timing of completion), a further ÂŁ6m 12 months following completion, and up to ÂŁ10m of additional proceeds based on timing and realisation of certain tax assets within the High Street business.
Net cash proceeds (adjusting for transaction and separation costs) of c.ÂŁ25m are to be deployed in line with the Group’s capital allocation policy.
The sale does not include the Group’s personalised online greeting card business, funkypigeon.com.
The Group will explore strategic options for this part of the Group, including a possible sale.
Carl Cowling, Group Chief Executive, commented:
“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.
“We have a highly successful Travel business, operating in fast growing markets in 32 countries and we are constantly innovating to deliver strong returns and meet our customers’ and partners’ needs.
“Our Travel business currently accounts for around 75% of the Group’s revenue and 85% of its trading profit.
“With the ongoing strength in our UK Travel division, and the scale of the growth opportunities in both North America and the Rest of the World, we are in our strongest ever position to deliver enhanced growth as we move forward as a pure play travel retailer.
“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. I wish the High Street team every success.
“As we look forward as a simplified, travel-focused Group, I am excited about the Group’s future prospects.
“With a clear strategy, a strong balance sheet, and operations in high growth and attractive markets, we are well-positioned to generate substantial growth and value for all stakeholders.”
