WH Smith in secret talks to sell historic high street arm

WH Smith, a prominent British retailer, is in secret negotiations to sell its entire high street business, marking a significant milestone in its over 230-year history. Sky News has exclusive access to these negotiations, revealing that the listed retail group, valued at nearly £1.5 billion, has been in talks with several potential buyers for several weeks.

WH Smith will officially confirm this strategic move to the London Stock Exchange on Monday morning. The company’s high street arm comprises approximately 500 stores across the UK, employing around 5,000 people. Currently, it operates alongside WH Smith’s more successful and profitable travel retail business, which thrives in airports, train stations, and hospitals.

The travel retail business boasts 600 shops in the UK, comprising half of its global network of around 1,200 travel retail outlets. Bankers at Greenhill have been appointed to oversee the sale process, with a potential deal expected in the coming months. However, the identities of the likely buyers remain undisclosed at this stage.

Under the leadership of Carl Cowling, the company’s chief executive, the decision to divest its high street arm and focus solely on travel retail is likely to be well-received by investors. One analyst expressed optimism about this strategic move, stating that it could lead to increased profitability.

WH Smith’s high street division, while still primarily selling greeting cards, books, and stationery, has historically struggled to generate substantial profits. In contrast, the travel arm offers a broader range of products, including food and drink, and technology items, contributing to its higher margins. Notably, the travel business now accounts for 75% of the company’s revenue and 85% of profits.

The company’s travel retail business has experienced rapid growth, particularly in the US market. Additionally, WH Smith’s retail business in hospitals is also thriving, with 145 stores in 100 hospitals across the UK. The company anticipates further expansion, with plans to open 200 additional sites in the coming months.

This potential sale represents a pivotal moment in the history of the British high street, signaling a shift towards a more specialized and profitable business model.
WHSmith, founded in 1792 by Henry Walton Smith and his wife Anna in Little Grosvenor Street, London, has a rich history. In 1848, the company made history by opening the first-ever travel retail store at Euston station.

However, amidst the challenges faced by the retail sector, particularly the closure of iconic stores like BHS, Debenhams, and Comet from physical locations in the past 15 years, questions have arisen about the future of WH Smith’s high street division. This week, it was revealed that approximately 15 WH Smith shops will be shuttered this year as part of an ongoing rationalization of its store estate.

In 2006, WH Smith’s news distribution arm, now known as Smiths News, underwent a demerger and became a separate London-listed company.

On Friday, shares in WH Smith closed at 1148p, reflecting a decline of around 5% over the past year. Following Sky News’ report on its strategic plans, WH Smith issued a statement confirming its exploration of potential options for this profitable and cash-generating segment of the Group, including a possible sale.

The statement emphasized WH Smith’s transformation into a focused global travel retailer over the past decade. The company’s Travel business boasts over 1,200 stores across 32 countries, accounting for three-quarters of the Group’s revenue and 85% of its trading profit.

However, the company clarified that there is no certainty about reaching an agreement, and further updates will be provided as necessary.

SKY NEWS