The high street chain formerly known as WH Smith has secured court approval for a major restructuring, which is expected to lead to the closure of around 150 stores and hit hundreds of jobs.
Court Approval and Financial Details
TG Jones’ restructuring plan was approved by the High Court on Wednesday, a move which will save the business from insolvency. Lawyers for the retailer told a judge on Friday that the company was facing an £8 million shortfall this week if he did not sanction the plans, adding that the company was “highly distressed”.
The now-confirmed proposals mean 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.
Judge's Decision
Mr Justice Hildyard said 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.”
The judge said in a written summary on Wednesday 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.”
Impact on Stores and Staff
The chain of high street shops was renamed to TG Jones last year after being bought by Modella, while WH Smith kept 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. It previously warned that the overhaul would put jobs at risk, but has not disclosed how many workers will be affected.
Tom Smith KC, for TG Jones, said on Friday that the “working assumption” is that around 150 of these 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 said the company has suffered from “long-term sales decline”, exacerbated by high inflation, increased online shopping, reduced consumer spending, with higher labour costs and taxes. The rebranding from WH Smith has also damaged sales, he added.
CEO's Response
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.”
Historical Background
Henry Walton Smith and his wife Anna first established WH Smith in 1792 in Little Grosvenor Street in Mayfair as a news vendor. After their deaths, the business was taken over by youngest son William Henry Smith in 1812 and continued to expand throughout the 19th century. The final member of the Smith family left the board in 1996 and the company decided to split the travel stores with those on the high street, selling off the latter to Modella last year.
