WH Smith is engaged in confidential discussions regarding the sale of its entire high street operations in the UK, more than 230 years subsequent to its inaugural store opening in central London.
Sky News has exclusively uncovered that the publicly traded retail company, now valued at nearly £1.5 billion, has been in dialogue with various potential buyers for this segment over several weeks.
WH Smith is anticipated to announce this initiative to the London Stock Exchange on Monday morning.
The high street segment comprises approximately 500 stores, providing employment for around 5,000 individuals nationwide.
This division is currently integrated with WH Smith’s more rapidly expanding and lucrative travel retail sector, which operates in airports, train stations, and hospitals.
The travel retail sector includes 600 shops throughout the UK, representing about half of a global footprint encompassing around 1,200 travel retail outlets.
Greenhill bankers have been designated to oversee the sale process of the high street operations, with a transaction expected in the upcoming months.
The specifics regarding the potential buyers remained uncertain by Saturday.
Under the leadership of CEO Carl Cowling, analysts believe that the divestment of the high street sector and the transition to a dedicated travel retail entity is likely to be positively received by investors.
WH Smith’s high street division, which reported a stagnant operating profit of £32 million last year, primarily sells greeting cards, books, and stationery, while the travel segment offers a broader range of food and beverages, as well as technology products.
The travel division now contributes 75% of the company’s total revenue and 85% of its profits, demonstrating significantly higher margins.
This sector is experiencing rapid growth, particularly in the US market.
The company’s retail business within hospitals is also expanding swiftly, with 145 stores located in 100 UK hospitals, and the potential for additional openings in 200 more locations, as indicated in their latest results from November.
The news surrounding the potential sale marks a pivotal moment in the narrative of the British high street.
The first WH Smith store was inaugurated in 1792 by Henry Walton Smith and his spouse Anna on Little Grosvenor Street, London.
The company established the first-ever travel retail outlet at Euston station in 1848.
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Questions have lingered regarding the future of WH Smith’s high street division for numerous years, particularly with the turmoil affecting others in the retail sector. Prominent retailers such as BHS, Debenhams, and Comet have all shuttered their physical stores in the past 15 years.
This week, it was revealed that around 15 WH Smith locations are set to close this year – part of a routine annual consolidation of its store portfolio.
In 2006, the company’s news distribution arm, now recognized as Smiths News, was spun off into a separate publicly traded entity.
On Friday, WH Smith shares concluded at 1148p, reflecting a decline of approximately 5% over the last year.
In response to Sky News’ report regarding its strategic exploration, WH Smith issued a statement confirming it is “evaluating potential strategic options for this lucrative and cash-generating segment of the Group, which may include a sale.”
“Over the past decade, WH Smith has established itself as a focused global travel retailer,” the statement highlighted.
“The Group’s travel operations encompass over 1,200 outlets across 32 nations, with three-quarters of the Group’s revenue and 85% of its trading profits deriving from the travel division.”
“There is no assurance that any agreement will materialize, and updates will be provided as necessary.”
