WH Smith sells high street stores to Modella Capital amid declining profits

In the United Kingdom, WH Smith is on track to complete the sale of its UK high street chain to Modella Capital, the owner of Hobbycraft. The deal, which is worth £76 million, was announced in March and is expected to conclude by the end of June 2025. This transaction will lead to the rebranding of WH Smith stores to TG Jones, resulting in the transfer of around 480 stores and approximately 5,000 employees to the new ownership. This move comes at a time when WH Smith’s high street operations have been underperforming, reflected by a 25 percent decline in profits reported earlier this year. While WH Smith prepares for this significant business transition, it has reported strong growth in its travel division, which includes stores located in airports, train stations, and hospitals. For the quarter ending May 31, the travel segment experienced a 5 percent increase in like-for-like sales, driven mainly by passenger spending at airport locations, which grew by 7 percent. The company did not release third-quarter financials for the high street division due to the pending sale. However, the April half-year results indicated stagnation in the high street segment, where profits fell to £20 million. The ongoing transition highlights WH Smith’s strategic shift toward its more lucrative travel business, which now constitutes a significant part of the company's revenue. Currently, WH Smith operates over 1,200 travel stores across 32 countries, and this segment is emerging as the predominant driver for growth and profits. The group has also made investments in other retail sectors, indicating a strategy focused on diversifying its portfolio to stay competitive in changing market conditions. While this move is perceived as a necessary step given the high street division’s declining sales, it raises questions about WH Smith's future direction and the long-term viability of its operations. Industry analysts suggest that WH Smith must enhance its offerings to draw time-starved travelers willing to pay more for convenience. As the company enters its peak summer trading period, it will be essential for WH Smith to prove its adaptability and growth within the travel segment.