More than 120 TG Jones high street stores are facing potential closure following court approval for a significant restructuring. Landlords of the former WH Smith stores are being requested to agree to a three-year rent-free period to reduce costs and avoid insolvency.
Lawyers representing TG Jones informed a High Court judge that the company was encountering an £8 million weekly deficit and expressed deep distress. The approved plans entail an additional £15 million loan from Modella Capital, the company’s owners, on top of the £10 million loan provided in April, along with reduced rent rates for landlords.
During a brief hearing, Mr. Justice Hildyard stated that he found the decision to sanction both plans challenging but ultimately ruled in favor of approving them. The chain was rebranded from WH Smith to TG Jones after being acquired by Modella, while WH Smith retained its stores in travel locations like airports and train stations.
TG Jones operates approximately 450 stores with 4,700 employees, primarily in the UK. It is anticipated that around 150 stores may close as a result of the restructuring, allowing landlords who disagree with the reduced rates to terminate their leases.
Various factors have contributed to TG Jones’ challenges, including long-term sales decline, high inflation, increased online shopping, reduced consumer spending, higher labor costs, and taxes. The rebranding from WH Smith has also had a negative impact on sales.
The historic background of WH Smith dates back to 1792 when it was established as a news vendor in Mayfair. Over the years, the business expanded, eventually splitting into travel and high street stores. The high street stores were sold to Modella last year.
Mr. Justice Hildyard described the approved plans as intricate and having extensive implications. He concluded that the plans have a realistic chance of achieving their objectives and granted his sanction.
CEO of TG Jones, Alex Willson, expressed appreciation for the court’s approval of their Restructuring Plan, stating that it positions the company for a stronger and more sustainable future. He acknowledged the support of colleagues, partners, stakeholders, and Modella Capital for their ongoing financial commitment.
