Investment firm Modella Capital, which purchased WH Smith’s high street empire last year, has brought in advisers as it looks to place the business on a more sustainable footing.
It is understood Modella Capital has called on advisers at Teneo to come up with a plan to restructure the TG Jones business after a period of tough trading, The Telegraph reported.
It is thought around 80 of the 480 rebranded TG Jones stores could be at risk, but no closure plans have been finalised yet.
It is also understood Teneo will be looking at alternative solutions, such as a request for financial assistance from WH Smith.
Last year, WH Smith announced the sale of its stores to the private equity firm for £40m. The deal did not include the WH Smith brand, meaning all stores were to be rebranded as TG Jones after a short transition.
At the time, WH Smith said the deal would allow it to focus on its more profitable travel retail operations, which make up about 75% of the group’s revenue.
Industry sources told The Telegraph that insufficient investment under its previous parent company, increases to employer NICs and the national living wage, and economic uncertainties had piled pressure on the brand.
“The economic conditions for all retail businesses are tough,” a Modella Capital spokesperson said. ”The combination of cost inflation, weak consumer confidence and adverse Government fiscal policies puts significant pressure on all retailers.
”Against this backdrop, the management of TG Jones is working hard to turn around this important retail business, and they are drawing on the best available advice in doing so. TG Jones’ management and Modella Capital are committed to building a sustainable future for this important UK business.”
Speaking on the news, Mayo Wynne Baxter partner Nick Stockley said: “Shopping habits have changed dramatically over the past few years. As with other Modella brands, TG Jones represents a further attempt to keep a failing business, WH Smith, alive.
“The fact remains that TG Jones’ offering is the same as WH Smith’s but under a different name. There was some brand loyalty to WH Smith, which has been lost in renaming to TG Jones.”
Looking ahead, he added: “It seems likely that, in the long term, it will become another casualty on the high street. There will be some relatively profitable outlets which may remain, so the TG Jones name may not disappear altogether.
“However, the decision to take on the failing WH Smith on the basis that a rebrand would bring customers back looks questionable.”
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