Potential buyer may encounter a year-long ban due to widespread store closures at WH Smith
Revamped Article:
Hey there! Let's dive into the hullabaloo surrounding WH Smith's high street stores. The recent takeover by Modella Capital has folks talking, and for good reason.
The new kid on the block has agreed to keep the ownership of WH Smith's 480 high street stores at bay for a while. This 12-month freeze comes courtesy of a transitional services agreement (TSA) between the two. The catch? Modella can't pull off any fancy store closure schemes during this period, thanks to this clause.
You might wonder, "What's the big deal?" Well, industry insiders say it's significant. After all, WH Smith has been a staple on the high street for a jaw-dropping 233 years. But the handover is complete, and WH Smith will now focus solely on travel retail, leaving the high street behind.
Modella, on the other hand, has other plans. They aim to breathe new life into the stores by rebranding them under the name TG Jones, marking a fresh start for the former WH Smith stores.
Now, you might think Modella is being all chill and cuddly with this TSA business. But hold your horses! They've been busy restructuring other retail assets they own, specifically Hobbycraft and The Original Factory Shop. They've rolled out company voluntary arrangements (CVAs) there, which, let's face it, is code for "closing loss-making stores and slashing rents."
So what does this all mean for WH Smith's high street stores? Essentially, Modella's got a year to assess the situation before taking any drastic measures, like launching a mass closure spree. But after that, watch out! The restrictions lift, and who knows what Modella might decide to do if the financial performance stays in the dumps.
Stay tuned for more updates as this saga unfolds!
Extra Insight:
- It's worth noting that Modella bought the stores for a tidy £76 million, effectively ending WH Smith's 233-year reign on the high street.
- The TSA between Modella and WH Smith allows Modella to continue using WH Smith's systems until the acquisition is complete, but it prevents Mass Store Closures or implementing CVAs for the first year.
- Despite the freeze, Modella has shown a proactive approach to restructuring other retail assets, such as Hobbycraft and The Original Factory Shop.
- If financial performance remains weak, Modella might consider closing stores or restructuring after the 12-month moratorium period ends.
- Analysts view Modella's takeover and rebranding as a strategic move to stabilize and potentially revitalize the ailing stores.
In the midst of this shift, Modella may take a closer look at the financial performance of WH Smith's high street stores, potentially considering restructuring or rebranding strategies similar to those applied to retail assets like Hobbycraft and The Original Factory Shop. Conversely, WH Smith intends to concentrate on its travel retail business, relinquishing control of 480 high street stores.
