Around 80 former WH Smith shops could shut on the high street in TG Jones cost-saving plans
Around 80 TG Jones shops could be shut under cost-saving plans - following the sale of WH Smith's High Street business to private equity last year.
This will spark fresh fears over a wave of closures on the high street - after brands from Poundland to River Island have shut shops in recent months.
Modella Capital, which bought around 480 shops from WH Smith last June, has reportedly asked restructuring experts at Teneo to look at options that may include shop closures.
The shops that have been identified as at risk have experienced weak trading, according to The Telegraph.
Store closures are one option under consideration but no decisions have been made yet, the report said.
WH Smith sold hundreds of shops to Modella Capital last summer
Modella - which also owns Hobbycraft - is reportedly constrained from shutting underperforming stores for a year as per the terms of its £40million takeover agreement with WH Smith.
The sale last year ended the familiar presence of the WH Smith on the British High Street after 230 years.
Its new owner's rebrand of the chain also raised eyebrows due to the similar name.
It comes as retailers are grappling with depressed consumer confidence and increases to the cost of doing business.
Share this article
Retailers have come under pressure after hikes to wages, National Insurance contributions and energy bills.
Modella placed The Original Factory Shop and Claire's Accessories into administration in January, triggering around 2,200 job losses and nearly 300 store closures.
Dan Coatsworth, head of markets at AJ Bell, said poor sales could be due to a rebrand involving 'very little effort' to change the inside of shops.
He said: 'The new owner has simply slapped the TGJones name above the front door and that's it.
'The TGJones brand is completely unknown to the public.
'Modella is simply banking on people thinking they're still walking into a WH Smith and not noticing the business change.
'After a while, the public will cotton on to the new name, and Modella will need to give them a reason to keep visiting the stores.'
He described the chain's shops as 'woefully under-invested' and said Modella 'needs to pull up its socks and put some energy into TGJones otherwise this retail brand might have a short life.'
WH Smith has chosen to focus on its shops in travel hubs, including airports and railway stations - in pursuit of becoming a 'one stop shop' retailer.
But it has faced its own trials in recent months after an accounting blunder led to the resignations of top bosses and has resulted in investor scrutiny.
A spokesman for Modella said: 'The economic conditions for all retail businesses are tough. 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 TGJones is working hard to turn around this important retail business, and they are drawing on the best available advice in doing so.
'TGJones’ management and Modella Capital are committed to building a sustainable future for this important UK business.'
DIY INVESTING PLATFORMS
Affiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.
Compare the best investing account for you
