WH Smith ‘in Secret Talks Over Sale of Historic High Street Business After More Than 230 Years

WH Smith is reportedly in talks to divest its historic high street business, a significant step for the London-listed retail group that first opened a store in the heart of the capital more than two centuries ago. Sky News has exclusively learned that the company, with a market value close to £1.5 billion, has been engaging with potential buyers of its high street division for several weeks.

This report comes at a time when there is a larger shift of change in Britain’s high street retail scene, where other massive chains have gone through huge bottlenecks or even disappeared within the past few years. WH Smith, however, is a staple of British retail since its humble beginnings. The company’s high street operations currently encompass around 500 stores and employee approximately 5,000 people across the UK. It runs alongside WH Smith’s growing travel retail business, which is among the components that have driven the business in terms of growth and profitability. More details are expected to be shared with the London Stock Exchange this Monday concerning this proposed sale.

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Brian Robert Marshall, CC BY-SA 2.0 https://creativecommons.org/licenses/by-sa/2.0, via Wikimedia Commons

Part of a far wider global group, which covers nearly 1,200 such locations worldwide, this UK part of the group owns about 600 locations as travel retail concerns. Much bigger in profit areas, these establishments operate mostly inside airports, some stations, and a few major hospitals. However, its big brother is high street, dominated still by selling books, stationery, and cards. In contrast, the travel retail arm has expanded its offerings to include food and drink as well as technology products, which has helped it capture a larger share of the company’s revenue.

Sources close to the deal have indicated that investment bankers from Greenhill have been hired to oversee the sale process. However, it is still not known who the interested parties are, and a deal is expected to be reached within the next few months. Analysts say the move to spin off the high street business might be strategic for WH Smith to emerge as a travel-focused retailer only, something investors might like.

Under the leadership of CEO Carl Cowling, the travel division now generates 75% of the total revenue and 85% of the operating profits of the company. This skewed revenue split underlines the rising significance of the travel sector to WH Smith’s future growth. The company’s hospital presence has also grown at a rapid pace, with 145 stores in 100 hospitals across the UK. WH Smith has scope to expand further, with 200 more hospital-based shops in the pipeline.

The sale of the high street arm would be a seismic change for a company with such strong historical roots in the UK’s retail landscape. WH Smith was founded in 1792 by Henry Walton Smith and his wife, Anna, who opened their first shop on Little Grosvenor Street in London. Over the years, WH Smith became synonymous with British high street shopping, from flagship stores typically found in very prominent locations right across the nation. The start of the business into travel retail began with a first-ever shop opening in the Euston Station in 1848; that marked a start to their current dominant role in the market.

The possible exit from the high street division arrives at a time when traditional retail is facing its greatest challenges yet. The British high street has been in contraction for years. Established brands BHS, Debenhams, and Comet were casualties of changed consumer habits and the growth of online shopping. This week it was announced that WH Smith was to close 15 stores in its annual round of rationalisation. These insolvencies are symptomatic of the deep-seated problems that many high street retailers face in trying to keep up with a revolution in digital and changing consumer preference.

In 2006, WH Smith took a major leap by demerging its news distribution business, which is now called Smiths News, as an independent, separately listed company in London. The move allowed the company to refocus its strategy and streamline its operations, and now seems that WH Smith is considering another transformational move. The sale of the high street business would allow the company to focus entirely on its travel retail arm, which has proven to be a very lucrative and rapidly growing unit.

The discussions for selling the high street division continue but, within such reports from Sky News, the WH Smith business has accepted talking through the matter with the required statement. In the statement, the company acknowledged that it was “exploring potential strategic options for this profitable and cash-generative part of the Group, including a possible sale.” The company’s focus on its travel business was underscored in the statement, which noted that the travel sector now accounts for the majority of WH Smith’s revenue and profits.

“Over the past decade, WH Smith has become a focused global travel retailer,” the statement read. “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.”

At the same time, the company stated that “there can be no certainty a transaction will proceed” and said it would give further updates “as and when appropriate.”

As WH Smith weighs the future of its high street business, the sale is a reminder of the seismic shifts taking place across the UK’s retail industry. Such companies with their long histories on the high street are reassessing their strategy in line with changing consumer needs. With travel retail growing at such an incredible rate, the WH Smith decision will mark the next stage in the company’s long and storied history, one that will undoubtedly shape the way the business – not to mention the British high street – grows from here.

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