WH Smith is exploring potential strategic options for its High Street business in the UK, including a possible sale.
The group issued a statement confirming its plans following press speculation on Saturday. However, it noted that there was no certainty that any agreement would be reached and that it would provide updates on the process “as and when appropriate”.
WH Smith is said to be in talks with a handful of potential bidders, having kicked off the prospective sale process at the end of last year.
A sell-off would allow the company to focus on its better-performing Travel division, which has over 1,200 stores operating in airports, train stations and hospitals across 32 countries. It accounted for three-quarters of the group’s £1.9bn revenue last year and 85% of its trading profit.
In contrast, WH Smith’s 500-strong High Street chain has struggled for growth in recent years. Whilst it remains profitable (£32m last year), the company has been disposing of underperforming stores amid tough trading conditions.
Bankers at Greenhill are reported to have been appointed to run the sale process for the High Street business, with a deal expected in the coming months. Restructuring firm Alteri is understood to be among a small group of parties considering a potential bid. However, the prospect of the chain being picked up by a turnaround firm has raised questions over potential job cuts or shop closures.
Commenting on the prospective sale, Kien Tan, a senior retail adviser at PwC, said: “The same formula that works in travel stores is no longer sufficient on high streets, where many of its products are available at other retailers or online.
“That doesn’t mean that the high street stores don’t have a future, but they probably will look very different – different products, perhaps incorporating hospitality or other services to give people a reason to visit. That doesn’t mean that WH Smith needs to disappear, but it might have a different brand name above the door to reflect the different customer proposition.”
Nicholas Found, Head of Commercial Content at Retail Economics, added: “While the high street division remains profitable, it’s clear that WH Smith has strategically pivoted toward becoming a focused global travel retailer. The move reflects broader structural issues facing legacy high street retailers, with many grappling to find relevance in a digital-first era, amid mounting cost pressures from announcements made in the Budget.
“For WH Smith, the divestment would enable it to focus entirely on its fast-growing travel retail business, particularly in markets like the US, where there’s significant untapped potential. For prospective buyers, it could present opportunities to restructure and reimagine WH Smith’s high street presence, but it’s a challenging climate to operate in.”
NAM Implications:
- An inevitable step from the time High Street performance diluted Travel division results.
- A sale will be preceded by further store closures by the new owners.
- A big but necessary move for WH Smith…
- Meanwhile, a challenge for the new owners…
- …and other High Street retailers.
