Following the news that WH Smith has sold its UK high street business to a private equity firm, Modella Capital, in a £76m deal; Zoe Mills, lead retail analyst at GlobalData, a leading data and analytics company, offers her view: “The high street business has consistently pulled down group revenue over the last three years, with this arm of the company accounting for under 25% of group revenue. WH Smith’s struggles in its high street arm have come amid slow reactions to weakening demand for its core offer, with consumers turning to Home Bargains and B&M for stationery and greeting cards, unable to justify WH Smith’s higher price points. Modella Capital, which owns Hobbycraft and The Original Factory Shop, should be a good fit for WH Smith’s high street arm, with it able to take learnings from Hobbycraft to enhance its proposition and give these high street locations a much-needed injection of cash to bring them up to scratch.
“One significant challenge for its new owner will be the loss of the WH Smith 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.
“WH Smith’s store portfolio has been well managed, and it has an average remaining lease length of under two years, meaning that Modella Capital will not be committed to keeping unprofitable stores open for long. It should consolidate its store portfolio, shuttering inefficient stores, and improve the remaining store estate to bring all remaining locations to a high standard.
“WH Smith’s attention on its flourishing travel division is the best course of action, and as it shakes off its high street fascia, it should move through 2025 in a new and better position. It must focus on expanding its proposition in these travel hubs to ensure it is a one-stop shop destination for travellers.”
