TG Jones, the high street chain formerly known as WH Smith, has been warned it could close 150 stores as it faces an £8 million shortfall this week. The company is seeking court approval for a restructuring plan to avoid insolvency, which would include an additional £15 million loan from its owner Modella Capital, on top of a £10 million loan granted in April, and reduced rent rates for landlords.
Background of the name change
The chain was renamed TG Jones last year after being acquired by Modella Capital, while WH Smith retained its group of stores in travel locations such as airports and train stations. TG Jones now operates around 450 stores and employs approximately 4,700 staff, mostly in the UK.
Court hearing details
During a hearing on Monday, Tom Smith KC, representing TG Jones, described the business as "highly distressed" after suffering a "long-term sales decline." He stated that the "working assumption" is that around 150 stores will close as a result of the plan, as landlords who do not accept the reduced rent rates can choose to terminate the lease. Smith added that paying tax, rent, suppliers, and payroll this week would leave the company with an £8 million shortfall.
In written submissions, Smith said: "As is well known, the UK retail sector has faced serious trading difficulties in recent years. The problems facing the sector have their roots in macroeconomic factors such as high inflation, the shift to online shopping, reduced consumer spending, higher labour costs and increased taxes."
Landlords' response
Ben Shaw KC, representing a group of landlords, said the rentiers are not opposed to the plan following recent negotiations over the deferral of rent payments in the first year of the plan. Mr Justice Hildyard is expected to give a decision on Wednesday.
