Around 150 TG Jones stores across the UK are at risk of closure, and hundreds of jobs are also under threat, after the High Court approved a major restructuring plan for the high street chain. The company, formerly known as WH Smith, secured the court's approval on Wednesday, a move that will save the business from insolvency.
North East Branches Affected
The North East has several TG Jones sites, including branches in Newcastle city centre, Gateshead Metrocentre, Durham, and Morpeth. However, it has not yet been revealed which specific stores will be shut.
The restructuring plan was approved by Mr Justice Hildyard in a brief hearing on Wednesday. Lawyers for TG Jones had told a judge on Friday that the company was facing an £8 million shortfall this week if the plans were not sanctioned, adding that the company was “highly distressed”.
Financial Details of the Restructuring
The approved proposals include an extra £15 million loan from the company’s owners, Modella Capital, on top of £10 million loaned in April, and reduced rates of rent for landlords. Mr Justice Hildyard said: “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.”
Tom Smith KC, for TG Jones, said on Friday that the “working assumption” is that around 150 stores will close as a result of the plans, as landlords who do not wish to accept the reduced rate can choose to terminate the lease. He also noted that 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 has also damaged sales, he added.
Background and Impact
The chain of high street shops was renamed to TG Jones last year after being bought by Modella Capital, while WH Smith retained its group of stores in travel locations such as airports and train stations. There are around 450 TG Jones stores with 4,700 staff, mostly in the UK.
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.”
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.” The judge concluded: “I propose to sanction the plans.”
