WHSmith sells High Street division to become ‘pure play global travel retailer’

Leading travel retailer WHSmith has agreed a sale of its High Street division to Modella Capital for an enterprise value of £76 million (US$98.5 million) as it sharpens the focus on its fast-growing Travel division.

Mar 28, 2025 - 09:34

WHSmith sells High Street division to become ‘pure play global travel retailer’

UK. Leading travel retailer WHSmith has agreed a sale of its High Street division to retail-focused investment group Modella Capital for an enterprise value of £76 million (US$98.5 million) on a cash and debt-free basis.

In a statement, WHSmith said the move is consistent with its strategic focus on becoming “a pure play global travel retailer”. A potential sale of the High Street arm was first flagged earlier this year.

The WHSmith brand is not included in the sale and the group’s Travel divisions will continue to trade under the brand name across 32 countries, including at major airport locations, hospitals and rail stations in the UK.

**The Travel division contributed 85% of WHSmith trading profit in FY2024; Birmingham Airport pictured**

The High Street business currently employs approximately 5,000 people across around 480 stores in primary locations across the UK and from its Swindon-based Support Centre.

All stores, colleagues, assets and liabilities of the High Street business will move under Modella Capital’s ownership as part of the transaction. The business will operate for a short transitional period under the WHSmith brand while it rebrands as TGJones. It will be led by Sean Toal, currently CEO of the WHSmith High Street business.

Modella Capital last year acquired Hobbycraft, the largest arts and crafts retailer in the UK, from asset manager Bridgepoint.

Focus on Travel division

In recent years. WHSmith has increased its focus on Travel, with 75% of revenue and 85% of trading profit coming from that division in the last financial year.

A statement added: “By removing exposure to the UK High Street and with c.50% of the business now international, the transaction will enhance the group’s financial profile.” WHSmith highlighted the opportunity for:

- Enhanced revenue growth
- Enhanced PBT margin
- Enhanced rate of growth in trading profit and EPS
- Maintaining the current attractive free cash flow generation.

Elaborating on the changed financial profile of the company, WHSmith noted that in the financial year ended 31 August 2024, the Travel business generated revenue of £1,466 million (US$1.9 billion) and headline trading profit of £189 million (US$245 million). Excluding the High Street business, the group’s proforma revenue growth would have been +10% versus the +7% reported, and profit from trading operations growth would have grown +15% versus the +13% reported.

The Travel business is highly cash generative, it added, with continuing strong free cash flow generation expected. In 2024, without High Street, proforma free cash flow would have reduced from £53 million to £45 million (US$58 million) and proforma Headline EBIT to free cash conversion after capex investment, would have remained at 32%.

Proforma capital expenditure for the full year 2024 would have been £107 million (US$139 million) compared with £129 million, and proforma leverage would have been higher at 1.6 times rather than 1.4 times.

The transaction is expected to complete in the final quarter of the group’s current fiscal year (which ends on 31 August), with anticipated gross cash proceeds of £36 million (US$47 million) at completion (subject to customary working capital adjustments based on timing of completion), a further £6 million (US$7.8 million) 12 months following completion, and up to £10 million (US$13 million) of additional proceeds based on timing and realisation of certain tax assets within the High Street business.

**The group retains its UK rail and airport business while divesting High Street operations, which will be rebranded as TGJones (London King’s Cross Station pictured)**

Net cash proceeds (adjusting for transaction and separation costs) of around £25 million (US$32.4 million) are to be deployed in line with the group’s capital allocation policy.

The sale does not include the Group’s personalised online greeting card business, funkypigeon.com. WHSmith will explore strategic options for this, including a possible sale.

Group CEO Carl Cowling said, “As we continue to deliver on our strategic ambition to become the leading global travel retailer, this is a pivotal moment for WHSmith as we become a business exclusively focused on Travel.

“We have a highly successful Travel business, operating in fast-growing markets in 32 countries and we are constantly innovating to deliver strong returns and meet our customers’ and partners’ needs. Our Travel business currently accounts for around 75% of the Group’s revenue and 85% of its trading profit.

“With the ongoing strength in our UK Travel division, and the scale of the growth opportunities in both North America and the Rest of the World, we are in our strongest ever position to deliver enhanced growth as we move forward as a pure play travel retailer.

“As our Travel business has grown, our UK High Street business has become a much smaller part of the WHSmith Group. High Street is a good business; it is profitable and cash generative with an experienced and high-performing management team. However, given our rapid international growth, now is the right time for a new owner to take the High Street business forward and for the WHSmith leadership team to focus exclusively on our Travel business. I wish the High Street team every success.

“As we look forward as a simplified, travel-focused Group, I am excited about the Group’s future prospects. With a clear strategy, a strong balance sheet, and operations in high growth and attractive markets, we are well-positioned to generate substantial growth and value for all stakeholders.”