WH Smith’s High Street Disappearance: A Landmark £76 Million Sale

Written by Humairah Khokhar

Introduction

In 1792, Henry Walton Smith and his wife, Anna, opened the first WH Smith store. Since then, the business has taken on many forms: it has transformed from a small, family-run venture in London to an internationally-recognised PLC. Once aligned with high street and travel station sales, its investment strategy has notably shifted over the last few years. With an increasing focus on the travel retail market, its high street investment has trailed behind. Its website states: ‘Our brand is synonymous with the travelling experience’.

On March 28th, 2025, WH Smith PLC announced that its 480 high street storefronts would be sold to Modella Capital in a £76m sale; the sale does not include its trading name. WH Smith’s CEO Carl Cowling described it as a ‘pivotal moment’ for the business, as they ‘look forward as a simplified, travel-focussed Group’. It is evident that their strategy has shifted, and they are firmly focussed on the international travel retail market.

Model Capital’s strategy poses a marked difference. Its website states: ‘Our investments are focussed on retail and consumer businesses with a turnover of £10m-£1bn across the UK and Western Europe’. Evidently, despite WH Smith’s decision to move away from the high street, efforts to revitalise and grow tangible retail spaces remain.

Why did WH Smith’s Strategy Shift?

Over the past few years, WH Smith’s strategy has shifted away from the high street and towards travel retail storefronts. It may be tempting to attribute this shift to the rise of online retailers and the pandemic’s influence. Admittedly, both factors contributed to a marked lessening of footfall in brick-and-mortar storefronts. The decline of prominent high street retailers like Debenhams and Topshop was worsened by these changes, leading to both companies going into administration. However, in WH Smith’s case, it was their high street storefronts that recovered with greater ease, and thus somewhat mitigated the harsh losses suffered by their travel retail counterparts. According to the BBC, in April 2020, WH Smith’s sales had dropped by 83%, in comparison to the year before. By October 2020, it had recovered by 59%, and this rebound has been attributed to sales made by its high street stores. Revenues from its travel business remained at less than half the level they were a year prior. Arguably, its growth in those difficult times could be attributed to the longevity of its high street storefronts. Indeed, WH Smith’s CEO Carl Cowling described WH Smith as having experienced a ‘steady recovery.’

Ultimately, it is not the case that WH Smith’s high street arm has become untenably unprofitable. It is the case that its profitability has been increasingly declining, and WH Smith’s travel business has proved the more profitable venture. Although the travel venture did struggle during the pandemic, it has made a marked recovery as travel restrictions have been eased. Thus, WH Smith’s investment in travel storefronts has continued to increase, contrasting its declining investment in the high street. As part of its sale announcement, WH Smith released information on its financial breakdown. It stated: ‘In the financial year ended 31 August 2024, 75% of the Group’s revenue and 85% of its trading profit came from its Travel business.’

Retail Gazette has proposed that Chancellor Rachel Reeves’ Autumn 2024 Budget may have hastened WH Smith’s high street closure. On November 18th, 2024, 81 businesses, many of whom are prominent names on the high street, wrote a letter addressing the chancellor. The businesses critiqued the higher taxes levied against them, describing retail as ‘already one of the highest taxed business sectors’. They outlined how the chancellor’s decision to increase the National Living Wage and the rate of employers’ National Insurance Contributions would damage their profit margins, resulting in negative, cumulative effects. They stated that the aforementioned changes would: ‘increase inflation, slow pay growth, cause shop closures, and reduce jobs, especially at the entry-level’. Several of the signed retailers and retail associations promoted similar products sold by WH Smith’s high street storefronts, including Card Factory, Tesco, and Booksellers Association. Their assertions strongly evidence that the new Budget contributed to WH Smith’s decision to hasten its high street sale.

What is Modella Capital’s Strategy?

Modella Capital’s website states that it aims to ‘secure a prosperous future’ for its acquired businesses. Its portfolio includes Hobbycraft, The Original Factory Shop, and now WHSmith, amongst other retailers. Interestingly, before its acquisition by Modella Capital, The Original Factory Shop was one of the businesses that critiqued the chancellor’s Budget.

In acquiring high street storefronts that are on the decline, and investing money in their revitalisation, Modella Capital requires a clear, actionable strategy. They have announced that the acquired WH Smith storefronts will be rebranded as TG Jones. Although the sale does not include WH Smith’s trading name, it is clear that the investment firm has taken inspiration from WH Smith’s branding. The new storefronts will maintain a similar colouring, font style, and purpose. Arguably, part of its strategy is to create continuity in the minds of consumers, as WH Smith’s historic legacy holds financial benefits. Brand loyalty must be capitalised on. Per Retail Gazette, the investment firm also plans to retain ‘existing product offerings’, including WH Smith’s in-store Post Office service and Toys R Us shop fronts.

Alongside maintaining continuity, Modella Capital is likely to be considering changes to the acquired storefronts, in a bid to increase its new venture’s profitability. Per Retail Gazette, GlobalData Retail’s lead analyst Zoë Mills believes that Modella Capital will operate a restructuring programme for WH Smith’s high street portfolio, as they have done with other ventures. The vast majority of its high street stores have ‘an average remaining lease length of under two years’, providing Modella Capital with the opportunity to ‘consolidate’ its acquired storefronts and focus solely on the most profitable locations.

What is Next?

WH Smith employs approximately 5,000 high street workers, who will be facing uncertainty with the announcement of its sale. If Modella Capital does consolidate its high street portfolio as part of a broader restructuring strategy, this will jeopardise jobs.

Consumers may appreciate Modella Capital’s choice to utilise similar branding to WH Smith, encouraging brand loyalty. Its decision to retain a similar product selection would enhance this effect. However, the potential closure of less profitable storefronts would prove disruptive and may encourage consumers to seek similar products elsewhere. This would prove beneficial for rival high street retailers, such as Card Factory.

WH Smith will be able to focus solely on the international travel retail market, increasing its profitability. The expansion of its storefronts in train stations, airports, and other related areas, has been marked. It has made North America a clear target; 320 of its 640 international storefronts are located there. Its website states: ‘We are continually looking for new store locations all over the world into which to grow our business’.

However, when looking forward, these plans for expansion may be complicated by the increasing popularity of online sales.

Conclusion

WH Smith’s decision to focus solely on travel retail signifies its lack of confidence in the high street. Its decision has arguably been hastened by the Budget’s announcement; several prominent retailers have voiced their concerns for the high street’s longevity amidst higher taxation and declining profits. Nevertheless, the acquisition of WH Smith’s high street storefronts by Modella Capital signifies that some firms continue to believe in the high street’s potential. It will be interesting to see what strategy Modella Capital implements, and how they manage a return on their investment.

Bibliography

• https://www.whsmithplc.co.uk/about-us/history-heritage
• https://www.whsmithplc.co.uk/what-we-do/international-travel-retail
• https://www.modellacapital.com/
• https://www.bbc.co.uk/news/articles/cj3n3en7gppo
• https://www.linkedin.com/feed/update/urn:li:activity:7311312393937059840/
• https://www.whsmithplc.co.uk/~/media/Files/W/WH-Smith/documents/press-releases/2025/whsmith-sells-uk-high-street-business.pdf
• https://www.bbc.co.uk/news/business-54894774
• https://brc.org.uk/media/2aljs1nz/ceo-letter-to-the-chancellor-budget-2024.pdf