UK travel retailer WHSmith Group has finalised an agreement to sell its UK high street division to investment firm Modella Capital for £76m ($98m) on a cash and debt-free basis.
This follows a confirmation by the retailer in January 2025 that it is evaluating strategic options including a sale for its UK high street business.
The high street segment comprises 480 stores with 5,000 employees and a support centre in Swindon.
All stores, employees, assets and liabilities associated with the high street operation will be transferred to Modella Capital.
The leadership of the business under the new ownership will remain with Sean Toal, currently CEO of the high street business.
The business will continue to operate under the WHSmith brand during the transition period before rebranding as TGJones.
The sale does not encompass the WHSmith brand itself. The group’s travel divisions will persist under the WHSmith name in 32 countries worldwide, including key locations such as airports, hospitals and railway stations within the UK.
Funkypigeon.com, the group’s personalised online greeting card service, is also exempted from the deal, with the company considering strategic alternatives including a potential sale for this business.
The completion of this transaction is projected to take place in the final quarter of the group’s fiscal year 2024/25.
The strategic move aligns with the group’s focus and enables management to dedicate efforts towards seizing significant growth opportunities in vital travel markets.
By divesting from the UK high street sector and with half of its operations now international, WHSmith anticipates an enhancement in revenue growth and profit before tax margin.
This shift is also predicted to accelerate growth in trading profit and earnings per share.
In the fiscal year that concluded on 31 August 2024, 75% of the group’s revenue and 85% of its trading profit were attributed to its travel division. This segment alone generated revenue amounting to £1.46bn and a headline trading profit of £189m.
Excluding contributions from the high street business, the group’s pro forma revenue growth would have registered at 10%, as opposed to the reported 7%.
WHSmith group chief executive Carl Cowling stated: “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.
