UK

Uncertainty for WH Smith high street shops as private equity firms ponder deal

It is understood private equity groups Hilco and Alteri are among parties to raise interest over a possible takeover of WH Smith’s high street arm.

WH Smith has said it is considering the sale of its high street shops
WH Smith has said it is considering the sale of its high street shops (Chris Radburn/PA)

Thousands of WH Smith workers face uncertainty as private equity suitors eye a deal to take control of the retailer’s high street shops.

It comes after the historic UK business confirmed over the weekend that it has held talks about potentially selling its 500-strong high street store business.

The company said it is assessing options for the division as it seeks to focus on its larger travel operation.

It is understood private equity groups Hilco and Alteri are among parties to raise interest over a possible takeover move for the business, after WH Smith launched the process late last year.

Both Hilco and Alteri have experience in UK retail as turnaround specialists.

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However, this may raise concerns among some workers over what a private equity takeover deal would mean for the future of the WH Smith high street estate and roughly 5,000 workers.

Peel Hunt analyst Jonathan Pritchard said that, while there is limited scope for a new owner to cut jobs in an efficiency drive, some could consider further store closures.

He said: “It is hardly as though this is a fat business, with lots of inefficient processes and store staff dossing about. Quite the opposite.

“Store closures could be material in somebody else’s hands, but WH Smith itself, clearly, has a good line of sight on how to get the most out of the chain, and it is unlikely that anyone else has the silver bullet to regalvanise profitability here.”

Earlier this month, WH Smith said it plans to close 17 of its high street shops during 2025.

Paddy Lillis, general secretary of Usdaw (the Union of Shop, Distributive and Allied Workers), said: “Staff at WH Smith are yet again plunged into a period of uncertainty and they are very worried about their futures.

“This news further highlights the urgent need for a robust industrial strategy for the high street.

“We urge the current owners and any buyer to fully engage with the staff to protect their jobs and help this longstanding iconic brand to thrive in the future.”

It is understood that WH Smith plans to retain its name for its travel business and could therefore strike a sale deal which will not include the use of the brand on the high street or it could involve a licensing process.

This is expected to be part of the negotiation process for prospective buyers.

Shares in WH Smith lifted higher on Monday as investors prepare for a potential cash windfall from a sale.

Analysts have predicted that the high street business could be sold for £100 million or more in the coming months.

Mr Pritchard predicted the company would sell the business for between £100 million and £130 million based on recent earnings.

Earnings remained flat at £32 million in the traditional high street business despite a 2% drop in like-for-like sales thanks to cost-saving efforts.

Investec analyst Kate Calvert predicted that the business will deliver lower earnings, at about £27 million, for the current year.

Ms Calvert added: “This is not a surprise and has been an obvious next step in the group’s evolution for a number of years given the investment focus has been on travel for a long time.”

The company stressed that the possible deal is part of its strategy to focus on its more profitable and growing travel business.

It said: “Over the past decade, WH Smith has become a focused global travel retailer.

“The group’s travel business has over 1,200 stores across 32 countries, and three-quarters of the group’s revenue and 85% of its trading profit comes from the travel business.

“There can be no certainty that any agreement will be reached, and further updates will be provided as and when appropriate.”

Hilco declined to comment. Alteri has been contacted for comment.