Credit: WHSmith PLC.

WHSmith has signalled its intention to become ‘the leading global travel retailer’ as it offloads 480 High Street stores to Modella Capital.

The sale of the High Street chain of the business in a transaction valued at £76 million/$98 million will allow the news, books and convenience retailer to move forward as a ‘pure play travel retailer,’ read a statement.

As reported, speculation had been swirling earlier this year that WHSmith was contemplating the sale of its High Street shops, whose share of revenue and profit has been dwarfed by an accelerating ‘Travel’ division in recent years.

A short transitional period will mean the High Street stores will continue to trade under the WHSmith brand – which is not included in the sale – while the business rebrands as TGJones.

The rebranding does not affect the Group’s Travel divisions, which will continue to carry the WHSmith branding across 32 countries, including major airports, hospitals and railway stations in the UK.

The transaction is expected to complete in the final quarter of the Group’s current fiscal year, with anticipated gross cash proceeds of £36m at completion (subject to customary working capital adjustments based on timing of completion), the statement continued.

A further £6m is due 12 months following completion, and up to £10m 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 circa £25m are to be deployed in line with the Group’s capital allocation policy.

‘Pure play travel retailer’

The Travel arm of the Group grew 11% in the 12 months ending 31 August 2024 to £1,466 million, with trading profit up 15% to £189m.

In the financial year ended 31 August 2024, 75% of the Group’s revenue and 85% of its trading profit came from the Travel business.

It is described by the Group as ‘highly cash generative’ and expects to maintain strong free cash flow generation.

The Group’s ‘Travel’ business grew 11% in the 12 months ending 31 August 2024 to £1,466 million, with trading profit up 15% to £189m.

“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,” said Carl Cowling, Group Chief Executive.

“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. 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.”

The WHSmith brand, a staple of the UK High Street for generations, will rebrand as TGJones. Credit: WHSmith PLC.

As a global travel retailer, WHSmith counts more than 1,200 Travel stores in its portfolio.

It adds that it has successfully developed its Travel Essentials offer, including a higher proportion of F&B, health and beauty and tech accessories.

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