Modella Capital, the owner of TGJones, has approached Teneo to help draw up plans to restructure the business.
It has been reported that around 80 of the brand’s 480 stores could be at risk, with Modella Capital tasking advisers at Teneo with drafting a restructuring plan that would put the former WHSmith high street business back on a more sustainable footing.
Although store closures could be one option open to Modella, Teneo is also exploring alternative arrangements, including requesting financial support from former operators WHSmith.
However, Retail Week understands that WHSmith would be unlikely to consider such proposals, not least because of the current situation it finds itself in following its US accountancy error.
As first reported by The Telegraph, executives at Modella have concluded that the firm is struggling to trade under its new moniker, having lost the WHSmith name in the buyout.
Sales at rebranded TGJones shops are down compared to shops yet to be rebranded.
Trading over Christmas at TGJones was understood to be poor and the retailer continues to struggle with a combination of a lack of investment in its shops under previous ownership, increased costs and a worsening economic backdrop.
The news comes after Retail Week revealed last week that Modella Capital had replaced TGJones boss Sean Toal with Hobbycraft chief executive Alex Willson.
Modella said Toal told them in December that he had made “a personal decision to leave the business” and that under his leadership “the new TGJones brand has been established and the business successfully separated from WHSmith”.
Modella has long claimed its goal with TGJones is to make it a “hub of the high street”, driving footfall by catering for a range of customer missions, such as Post Office services, alongside its own books and stationery proposition, and with in-store partners such as Toys R Us.
As a private business, TGJones has not provided an update on trading over Christmas. However, Hobbycraft – which is thought to have recently received takeover interest – reported that in the six weeks to December 28, total revenue increased 6.3% year on year. Two other Modella-backed retailers, Claire’s and The Original Factory Shop, have fallen into administration since the new year.
WHSmith decided to sell its high street business to focus on its faster-growing travel arm. WHSmith said at the time the deal was announced that the high street operation was profitable and cash-generative and employed around 5,000 people in 480 stores.
The division was rebranded as TGJones because WHSmith continues to operate its eponymous fascia in many UK travel locations as well as internationally.
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