TG Jones, the retail chain formerly known as WH Smith, has received court approval for a restructuring plan that could result in the closure of up to 150 stores and put hundreds of jobs at risk. The High Court sanctioned the plan on Friday, allowing the company’s private equity owner, Modella Capital, to implement reduced rent agreements with landlords as part of efforts to prevent the retailer’s collapse.

Modella Capital acquired the historic high street arm of WH Smith last year for £40 million, subsequently rebranding it as TG Jones. The chain currently operates around 450 to 480 stores across the UK and employs approximately 4,700 staff. The travel-focused WH Smith stores were retained under the original brand.

Lawyers representing TG Jones described the business as "highly distressed" and facing an immediate £8 million shortfall without court approval of the restructuring. They cited long-term sales decline, intensified by high inflation, shifting consumer habits towards online shopping, increased labor costs, and taxes, as key factors behind the difficulties. Additionally, the rebranding from WH Smith to TG Jones was reported to have negatively impacted sales.

Under the approved plan, Modella Capital will inject an additional £15 million in loans, supplementing the £10 million provided in April. The company proposed zero-rent rent holidays for 122 stores for up to three years, a move likely to be contested by some landlords. Those landlords unwilling to accept reduced rent terms may terminate their leases, potentially triggering the closure of the affected outlets.

While the exact number of job losses remains unclear, legal counsel for TG Jones indicated that the "working assumption" is that the closures could affect around 150 stores, with staff reductions to follow accordingly. The company has not disclosed specific figures on redundancies, emphasizing that these will depend on which stores remain operational under new rental arrangements.

TG Jones chief executive Alex Wilson expressed cautious optimism following the court’s decision, stating that the approval enables the company to proceed with its turnaround plan. He pledged to focus on improving in-store value and service while supporting employees through the transitional period. "There is a lot of work to do and some of the decisions we need to make won’t be easy," Wilson acknowledged.

Modella Capital has a history of acquiring distressed British retailers and implementing store closures, having previously undertaken similar measures at Claire’s Accessories and The Original Factory Shop. The private equity firm is concurrently planning further job cuts at footwear retailer Wynsors.

Market analyst Dan Coatsworth noted that while the court ruling provides TG Jones with a lifeline, the retailer faces significant challenges in adapting to the modern retail environment. He also pointed out the adverse implications for landlords, who may be compelled to accept reduced rents.

TG Jones, originally founded as WH Smith in 1792 by Henry Walton Smith and his wife Anna, has experienced a significant transformation amidst its ongoing financial struggles. The restructuring plan marks a critical juncture in the retailer’s history, aimed at restoring sustainability amid a rapidly changing retail landscape.