WHSmith Explores Sale of High Street Stores Amidst Retail Industry Challenges
WHSmith, the venerable British retailer with a 232-year history, is contemplating a significant shift in its business strategy by divesting its entire high street store portfolio. This move comes as the company aims to concentrate on its burgeoning travel business, which operates stores in airports and train stations, a sector demonstrating robust growth in contrast to the struggling high street landscape. WHSmith has engaged Greenhill Investment Boutique to manage the sale process and hopes to finalize a deal within the next three months. This decision reflects a broader trend within the retail sector, where companies are increasingly focusing on more profitable avenues amidst challenging economic conditions and evolving consumer behaviour.
Doug Putman, the Canadian entrepreneur who successfully resurrected HMV from administration in 2019, has emerged as a potential buyer for WHSmith’s 500 high street stores. Putman faces competition from several other interested parties, including restructuring specialists Alteri and Hilco, as well as Modella Capital, which recently acquired Paperchase and Jigsaw. Speculation also includes The Range’s owner as a potential bidder, given their recent acquisition of the Homebase brand and expansion drive. Putman’s interest in WHSmith follows his previous attempts to acquire Ted Baker and Wilko, showcasing his ambition to expand his presence in the UK retail market. A successful takeover by Putman could potentially lead to a resurgence of music sales within WHSmith stores, leveraging HMV’s expertise and possibly leading to cross-branding initiatives.
The potential sale of WHSmith’s high street stores raises several complex considerations, particularly regarding branding. If the high street and travel divisions are owned by separate entities, maintaining distinct brand identities would be crucial. One possibility involves WHSmith rebranding its travel arm using existing international names like InMotion or Marshalls. This strategic separation allows WHSmith to streamline operations, focus on its more lucrative travel business, and potentially attract buyers seeking to revitalize the high street presence under a different brand identity.
The decision to offload the high street stores resonates with investor sentiment, which favors prioritizing the more profitable travel division. Analysts view the move as strategically sound, allowing WHSmith to concentrate its resources on its core strength and divest from the underperforming high street segment. The travel business, which has significantly higher profit margins, represents a more promising area for growth and shareholder returns. Any potential buyer of the high street stores is likely to rationalize the portfolio, closing some of the 500 stores, many of which operate on short-term leases. This reflects the broader challenges facing high street retailers, with store closures and job losses becoming increasingly common.
The retail sector is bracing for a challenging period in 2025, with rising costs and changing consumer habits impacting profitability. The British Retail Consortium predicts that increased employer National Insurance Contributions will add £2.3 billion to the sector’s costs, while the British Chambers of Commerce reports that over half of businesses plan to raise prices. These pressures, coupled with rising inflation and a potential economic downturn, create a precarious environment for retailers. The Centre for Retail Research forecasts 17,350 store closures in 2025, following 13,000 closures in 2024, highlighting the ongoing struggles of the sector. Job losses are also anticipated, with some estimates suggesting up to 202,000 jobs could be at risk in 2025, exceeding the losses during the peak of the pandemic in 2020.
WHSmith’s planned closure of 17 high street shops in 2025 underscores the challenges faced by traditional retailers. Trade unions like Usdaw have expressed concerns about job security and called for a robust industrial strategy for the high street. The sale of the high street stores introduces a period of uncertainty for employees, and stakeholders are urging both the current owners and any potential buyers to prioritize job protection and ensure the long-term viability of the brand. The negotiation process will likely involve discussions on branding rights, with WHSmith potentially retaining its name for the travel business and either selling the high street brand separately or establishing a licensing agreement. The future of WHSmith’s high street presence remains uncertain, but the current trajectory suggests a significant transformation is underway as the company adapts to the evolving retail landscape.
