Modella Capital, under the leadership of TG Jones, is undertaking a significant restructuring strategy impacting its high street operations. This move potentially entails the closure of around 100 outlets from the chain’s portfolio of approximately 480 stores.
TG Jones Store Closure Plans
The restructuring arises as Modella seeks to stabilize its recent acquisition of WHSmith’s high street business, which was revamped to TG Jones last year. This undertaking follows a twelve-month moratorium on store closures, which expires this year.
Details of the Restructuring
Reports indicate that Modella is aiming to maintain about 400 locations, contingent upon landlords accepting rent reductions. The planned closures are part of a broader strategy to avert a potential collapse and streamline operations.
- Potential closures affect around 100 of the 480 stores.
- Approximately 400 stores could remain operational if rental terms are renegotiated.
Involved Parties and Legal Strategy
Modella is collaborating with Teneo, a professional services firm, and law firm Slaughter and May to navigate this restructuring process. A strategy being considered involves implementing a “cram-down” – a legal mechanism allowing a restructuring plan to proceed with the approval of a single class of creditors, even amid opposition from others.
Secure Trust, the provider of a £50 million loan for the acquisition, is expected to play a crucial role in the negotiations.
Background and Financial Context
The acquisition of WHSmith’s high street operations, which includes 464 stores in various locations, occurred last year. At the time, these stores generated over £400 million in annual turnover and an EBITDA of £41.2 million in WHSmith’s 2024 financial year.
However, challenges have emerged since rebranding to TG Jones. Some locations retaining the WHSmith name reportedly performed better than those under the new branding.
Stores at Risk
- Swindon
- Chippenham
- Oxford
- Ipswich
- Hampshire
- North Wales
- Stirling (expected closure in July due to unsuccessful lease renewal)
The restructuring efforts signal a dramatic shift in Modella’s strategy for the retail chain, amid ongoing challenges faced by mid-market high street retailers, including rising costs and changing consumer behavior.
As Modella assesses its broader retail portfolio, recent closures in other businesses highlight the difficulties posed by the current trading climate.
