HMV owner in talks to snap up WHSmith high street stores
THE owner of HMV is considering a swoop on WHSmith’s unwanted 500 high street stores, The Sun can reveal.
It is understood that advisers working for WHSmith have been in discussions with Doug Putman, the Canadian entrepreneur who rescued HMV from bankruptcy in 2019.
WHSmith has confirmed that it is considering offloading its entire high street estate in order to focus on its fast-growing travel business of shops in airports and train stations.
The retailer, which first opened its stores in the UK 232 years ago, is working with advisers at Greenhill Investment Boutique.
It is hoped that a deal can be reached within three months, according to sources.
Mr Putman will have to fend off competition from other bidders including restructuring firms Alteri and Hilco.
Modella Capital, which recently bought Paperchase and Jigsaw, has also been linked to a purchase by Sky News.
Analysts at AJ Bell also suggested that The Range’s owner could also be “a name to watch” as it is one of the few “retailers hungry for more, having last year bought the Homebase brand and up to 70 stores”.
Last October Mr Putman told The Sun that he would “love to buy more businesses in the UK”.
Mr Putman also tried to buy Ted Baker and Wilko.
A takeover of WHSmith’s stores by HMV could see a return to more records and CDs sold in WHSmith shops and a potential cross-over between the two brands.
HMV’s most recent accounts reveal that its sales rose by 18% to £177million while pre-tax profits doubled to £5.2million.
The firm has been helped by a vinyl revival.
One source said the difficulty for any buyers of WHSmith’s high street operations would be solving how the branding rights would be distinct from the airport shops in the UK if they were owned by different groups.
One option could be for WHSmith to adopt one of its international trading names, such as InMotion or Marshalls, for its entire travel business.
Shares in WHSmith rose by 1.05% to £11.60 in afternoon trading,valuing WH Smith at £1.5billion.
Investors have not wanted WHSmith to spend any more money on its high street arm, which has no real growth prospects.
Russ Mould at AJ Bell said; “Exiting makes strategic sense and there have been plenty of clues it would happen one day soon.
“The travel arm is where most of the profits are made. It makes sense to sharpen the focus on what a company does best by offloading less important interests such as the high street operations.”
It is likely that any buyer would not keep all of WH Smith’s 500 stores open for very long as many of the shops are on short two-year lease contracts with landlords.
RETAIL PAIN IN 2025
The British Retail Consortium has predicted that the Treasury's hike to employer NICs will cost the retail sector £2.3billion.
Research by the British Chambers of Commerce shows that more than half of companies plan to raise prices by early April.
A survey of more than 4,800 firms found that 55% expect prices to increase in the next three months, up from 39% in a similar poll conducted in the latter half of 2024.
Three-quarters of companies cited the cost of employing people as their primary financial pressure.
The Centre for Retail Research (CRR) has also warned that around 17,350 retail sites are expected to shut down this year.
It comes on the back of a tough 2024 when 13,000 shops closed their doors for good, already a 28% increase on the previous year.
Professor Joshua Bamfield, director of the CRR said: “The results for 2024 show that although the outcomes for store closures overall were not as poor as in either 2020 or 2022, they are still disconcerting, with worse set to come in 2025.”
Professor Bamfield has also warned of a bleak outlook for 2025, predicting that as many as 202,000 jobs could be lost in the sector.
“By increasing both the costs of running stores and the costs on each consumer’s household it is highly likely that we will see retail job losses eclipse the height of the pandemic in 2020.”