TG Jones, the high street chain formerly known as WH Smith, has secured court approval for a major restructuring plan expected to lead to the closure of around 150 stores and affect hundreds of jobs. The plan was approved by the High Court on Wednesday, saving the business from insolvency.
Court Approval and Financial Details
Lawyers for the retailer told a judge on Friday that the company faced an £8 million shortfall this week without the plan, describing the company as “highly distressed.” The approved proposals include an additional £15 million loan from owner Modella Capital, on top of £10 million already loaned in April, and reduced rent rates for landlords.
Mr Justice Hildyard stated in a brief hearing on Wednesday: “I am persuaded that it is the jurisdiction of the court to sanction both plans and it is my decision to do so. I did not find this to be an easy matter.”
Impact on Stores and Jobs
There are approximately 450 TG Jones stores employing 4,700 staff, mostly in the UK. The company previously warned that the overhaul would put jobs at risk but has not disclosed the exact number of workers affected. Tom Smith KC, representing TG Jones, said on Friday that the “working assumption” is that around 150 stores will close as landlords who reject reduced rent can terminate leases.
Alex Willson, chief executive of TG Jones, said: “We welcome the court’s approval of our restructuring plan. This decision allows us to move ahead with our turnaround strategy. The plan protects the substantial core of the store estate and makes TG Jones a stronger, more sustainable business. We are incredibly grateful to all the colleagues, partners and stakeholders who engaged constructively throughout the process, and to Modella Capital for its continued financial commitment.”
Reasons for Decline
The company has suffered from “long-term sales decline,” exacerbated by high inflation, increased online shopping, reduced consumer spending, and higher labour costs and taxes. The rebranding from WH Smith also damaged sales, according to Smith KC.
Henry Walton Smith and his wife Anna founded WH Smith in 1792 in Mayfair as a news vendor. After their deaths, the business was taken over by their youngest son William Henry Smith in 1812 and expanded throughout the 19th century. The last Smith family member left the board in 1996, and the company split its travel stores from high street stores, selling the latter to Modella last year.
Judge's Remarks
Mr Justice Hildyard said in a written summary that the approved plans are “complex” and “far-reaching in their effect.” He added: “I have had to stand back, and ultimately subjectively assess, whether the plans have a realistic prospect of achieving their purpose, or whether in reality they are flawed, or more generally, whether the writing was on the wall for retail operations of this kind. I propose to sanction the plans.”
