Four TG Jones stores in the Birmingham area are at risk of closure after the company secured a High Court-approved rescue plan that will see 150 stores shut across the UK. The brand, formerly known as WHSmith, is owned by Modella Capital, which had its insolvency plans approved by the High Court.
Rescue plan details
Lawyers for TG Jones stated that the company was suffering from a “long-term sales decline” and was “highly distressed.” High inflation, increased online shopping, reduced consumer spending, and higher labour costs were all cited as reasons for the company's financial situation. The rebrand from WHSmith was also noted as having negatively impacted sales.
It is understood that tax assets are expected to be worth about £8 million, meaning the takeover could involve no more than £18 million going to WHSmith. The specific Birmingham stores that will close have not yet been confirmed.
Expert and creditor reactions
Speaking to the Guardian, one creditor said: “I think they genuinely believe they can make a good fist of it and are creating a national retailer.” The source added: “I wouldn’t give them more than a one in three chance.”
Vernon Dennis, head of business advisory at law firm Howard Kennedy, commented: “This is a high-stakes test for Modella; if it can combine a restructuring of its balance sheet and consequent cost discipline with a genuine retail turnaround, TG Jones could stabilise; if not, it risks becoming a larger version of the failures we’ve already seen.”
