A wave of former WH Smith high street stores risk closures unless landlords agree to three year rent holiday
Up to 150 TG Jones high stores could close after it won court approval for a sweeping shake-up.
Landlords of another 120 former WH Smith stores are also being asked to agree to accept no rent for the next three years as part of plans to slash costs to stave off insolvency, and rent will be cut on hundreds of other stores by between 15% and 75%.
Lawyers for TG Jones told a High Court judge that the company was facing an £8million weekly shortfall if the did not sanction the plans, adding that the company was “highly distressed”. The now-confirmed proposals mean an extra £15million loan from the company’s owners Modella Capital, on top of £10million loaned in April, and reduced rates of rent for landlords.
Mr Justice Hildyard said in a brief hearing on Wednesday: “I am persuaded that it is the jurisdiction of the court to sanction both plans and it is my decision to do so. I did not find this to be an easy matter.”
The chain of high street shops was renamed from WH Smith to TG Jones last year after being bought by Modella. the rest of the WH Smith business kept its group of stores in travel locations such as airports and train stations.
There are around 450 TG Jones stores with 4,700 staff, mostly in the UK.
Tom Smith KC, for TG Jones, said on Friday that the “working assumption” is that around 150 of these will close as a result of the plans, as landlords who do not wish to accept the reduced rate can choose to terminate the lease.
He also said the company has suffered from “long-term sales decline”, exacerbated by high inflation, increased online shopping, reduced consumer spending, with higher labour costs and taxes.
The rebranding from WH Smith has also damaged sales, he added. Henry Walton Smith and his wife Anna first established WH Smith in 1792 in Little Grosvenor Street in Mayfair as a news vendor.
After their deaths, the business was taken over by youngest son William Henry Smith in 1812 and the business continued to expand throughout the 19th century. The final member of the Smith family left the board in 1996 and the company decided to split the travel stores with those on the high street, selling off the latter to Modella last year.
Mr Justice Hildyard said in a written summary on Wednesday that the approved plans are “complex” and “far-reaching in their effect”.
He added: “I have had to stand back, and ultimately subjectively assess, whether the plans have a realistic prospect of achieving their purpose, or whether in reality they are flawed, or more generally, whether the writing was on the wall for retail operations of this kind.” The judge continued: “I propose to sanction the plans.”
Alex Willson, CEO of TG Jones, said: “We welcome the court’s approval of our Restructuring Plan. This decision allows us to move ahead with our turnaround strategy.
“The Plan protects the substantial core of the store estate and makes TG Jones a stronger, more sustainable business. We are incredibly grateful to all the colleagues, partners and stakeholders who engaged constructively throughout the process, and to Modella Capital for its continued financial commitment.”
