WH Smith has agreed to the sale of its high street business to Modella Capital for an enterprise value of £76m.

As part of the deal, the retailer’s 480 UK high street stores will rebrand to TGJones, following a "short transitional period", with all employees moving under Modella’s ownership.

The firm said that the sale will create a "pure play global travel retailer", with the brand’s travel divisions continuing to operate 1,200 stores in 32 countries and at major airport locations, hospitals and rail stations in the UK.

The sale comes after WH Smith revealed in its full year results to 31 August 2024 that 75% of its revenue and 85% of its trading profit came from its travel business. In January, the firm confirmed that it was considering the sale of its high street business.

It stated that by removing its exposure to the UK high street and with 50% of its business now being international, the transaction will "enhance" the group’s financial profile, through revenue growth, an increase in its profit before tax margin and a growth in trading profit and earnings per share.

Group chief executive at WH Smith, Carl Cowling, described the move as a "pivotal moment" for the firm as it becomes a "business exclusively focused on travel".

He said: "As our travel business has grown, our UK high street business has become a much smaller part of the WH Smith 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 WH Smith 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."

Investment director at AJ Bell, Russ Mould, concluded: "Talk there were only a few parties left in the race to buy WH Smith’s UK high street stores implied the retailer might have to accept whatever it was offered. Ahead of the deal with Modella, there was speculation it would get £100m for the stores. A £76m enterprise value is disappointing, yet something is better than nothing for WH Smith.

"The WH Smith brand was the key reason why its stores managed to stay alive in a crumbling high street environment. Shoppers knew they could depend on the retailer for certain items and they kept coming back for more. Take the brand away and there is a major risk that footfall to these stores plummets under the TGJones name.

"TGJones will have to do something remarkable on pricing to lure in the punters, or Modella might simply be using that name as a temporary banner before striking deals to turn individual stores into alternative use."

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