TGJones owner details restructuring proposals putting stores and jobs at risk

TGJones, the renamed WHSmith high street division acquired by Modella last year, informed employees of the proposal memo seen and first reported by the Financial Times.

The retailer subsequently said in a statement: “TGJones has launched a formal process known as a restructuring plan to make the business fit for the future. The plan is an essential part of the company’s turnaround and will support further investment in stores over the long term. Modella Capital has committed to financial contributions totalling more than £35m as part of the process.

“This decision has not been taken lightly. While we continue to believe in the strength of the core business, TGJones has experienced highly challenging trading conditions over the past year, along with many other brick-and-mortar retailers. Weak consumer spending and cost-of-living pressures, combined with rising operating costs as a direct result of government policy and recent geopolitical events, have meant that the company as a whole has remained loss-making.

“The forced name change from WHSmith has also negatively impacted consumer awareness, despite the fact that the proposition has improved.

“The restructuring plan is designed to protect the substantial core of the store estate and create a stronger, more sustainable business that can continue to serve customers for years to come. We are extremely grateful to the many stakeholders who have pledged their support, including the Post Office and Toys R Us.

“The survival of this iconic 234-year-old business is our imperative. No decisions have yet been taken on how this will impact roles, but we will aim to preserve as many jobs as possible. Any potential store closures or role reductions will be subject to appropriate consultation, and we are committed to engaging openly and constructively with colleagues and their representatives. We want to be clear, however, that the plan may result in the closure of some stores and the loss of some roles. We recognise the impact this uncertainty will have on colleagues, their families and the communities we serve.”

If 150 shops close, that would represent about a quarter of TGJones’ store estate, and it is thought there will be redundancies at the retailer’s central support centre as well as in shops.

The launch of the restructuring plan means the retailer will start talks with landlords and other relevant creditors.

TGJones’ difficulties, confirming widespread speculation in the industry, are in contrast to the ambition originally set out by Modella, which envisaged store openings and enhancement of the proposition by initiatives such as the opening of Toys R Us and Hobbycraft areas in shops.

A raft of Modella investments has hit the buffer recently. Accessories specialist Claire’s and The Original Factory Shop both plunged into administration, although French entrepreneur Julien Jarjoura intends to relaunch the Claire’s brand in the UK from next month.