The owner of TG Jones, the business carved out of WH Smith’s old high street estate, has secured High Court approval for a sweeping restructuring that will close up to 150 shops and impose steep rent cuts across most of the stores that remain.
Modella Capital acquired the chain last year and rebranded it as TG Jones, stripped of the name it had traded under for more than two centuries after WH Smith sold its loss-making bricks-and-mortar arm to focus on travel retail. The chain currently runs 451 shops and employs 4,700 people. WH Smith’s travel outlets in railway stations and airports were not part of the deal, and the group retained the rights to the historic brand.
Less than a year on, Modella has pushed through a radical rescue plan, blaming “challenging retail conditions”. Alongside the closures, roughly 120 landlords will receive no rent for up to three years, while rents on hundreds of other shops will be cut by between 15 per cent and 75 per cent. Modella says the plan is essential to the survival of the business and that some of the savings will be reinvested in stores as part of a wider turnaround.
The High Court heard this week that the retailer was on the brink of insolvency, facing a cash shortfall of nearly £8m by the end of the week unless the deal was waved through. Tom Smith KC, for TG Jones, told the hearing the business was “highly distressed” and “running on fumes at the moment”. He said it would have run out of cash in April but for a £10m loan from Modella and the deferral of liabilities, including a large tax bill owed to HMRC.
Modella laid part of the blame on years of underinvestment by the chain’s previous owners, arguing that long-term sales had been in decline. It also pointed to current trading pressures and the loss of the WH Smith name, echoing the strains the business flagged earlier this year when TG Jones faced a bailiff threat over unpaid tax and business rates.
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