WH Smith Slashes High Street Sale Price by £12 Million Pounds as Trading Weakens

The venerable British retailer WH Smith has reduced the sale price of its high street business by £12 million following deteriorating trading conditions. The FTSE 250 company’s shares tumbled by 7 per cent during early Monday trading after revealing revised sale terms to investors.

The 233-year-old organisation will now receive gross cash proceeds of up to £40 million, significantly lower than the £52 million anticipated in March when it agreed to sell its 480 high street stores to private equity firm Modella. The reduction comes after Modella, which owns Hobbycraft, requested amendments to the transaction structure citing softer trading conditions.

WH Smith’s management indicated the original agreement was no longer viable, with stakeholders expressing increased caution regarding the high street business’s future under new ownership. The development marks a significant moment for the retailer, which first opened its doors in London’s Mayfair district in 1792.

The high street division has faced persistent challenges from supermarket expansion, discount retailers, and the surge in online shopping. The company’s travel retail segment, contributing 75 per cent of group revenue and 85 per cent of trading profit, has been the primary growth driver in recent years.

Rising operational costs present additional challenges for the new owner, with recent minimum wage increases and national insurance contribution changes expected to add £20 million to WH Smith’s cost base this year. The timing of the price reduction coincides with broader concerns about UK retail health, as May saw retail sales volumes decline by 2.7 per cent month-on-month.

Despite these challenges, WH Smith’s travel division continues to show promise, with a 5 per cent revenue increase in the quarter ending May 31. The company maintains its full-year outlook, expressing confidence in improved trading during the peak summer period. The WH Smith brand will persist in 32 countries through its travel division, operating at major airports, hospitals, and railway stations.