UK high street crisis as major retailer to close 150 stores
More than 100 stores are set to disappear from UK high streets after a London court approved a major restructuring plan aimed at securing the future of retailer TG Jones. The overhaul was backed after the company's legal team warned the court that the business faced an £8 million funding gap and risked insolvency if the proposal was rejected.
Under the agreement, owner Modella Capital will inject a further £15 million into the business, adding to the £10 million loan provided in April. The package also includes reduced rental costs agreed with landlords as part of the turnaround strategy.
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TG Jones, formerly known as WH Smith, currently operates around 450 stores across the UK and employs approximately 4,700 people. The restructuring is expected to result in the closure of more than 100 branches as the retailer reshapes its operations.
Tom Smith KC, representing TG Jones, told the court the company expects to shut almost 150 stores as part of the restructuring programme.
Approving the plans, Mr Justice Hildyard said he was satisfied the court had the authority to approve both restructuring proposals, although he acknowledged it had been a difficult decision to reach.
The retailer adopted the TG Jones name last year after its high street business was acquired by Modella Capital, ending the WH Smith branding on its stores.
WH Smith still exists in travel locations across the UK, including airports and train stations.
Mr Smith told the court the retailer had suffered a sustained fall in sales, driven by a range of economic pressures affecting the UK retail sector.
He said soaring inflation, the continued growth of online shopping, weaker consumer confidence, rising taxes and increased employment costs had all contributed to the decline.
Mr Smith also acknowledged that the transition from the WH Smith brand to TG Jones had negatively affected trading.
Following the High Court's decision, Alex Willson, chief executive of TG Jones, said: "We welcome the court's approval of our restructuring plan. This decision allows us to move ahead with our turnaround strategy.
"The plan protects the substantial core of the store estate and makes TG Jones a stronger, more sustainable business.
"We are incredibly grateful to all the colleagues, partners and stakeholders who engaged constructively throughout the process, and to Modella Capital for its continued financial commitment.]"