Seems to be my experience also. I've been in to a couple of the TG Jones shops and if the shop sign hasn't been changed you wouldn't notice the difference.
You can't buy a failing business, change nothing, and expect it to do better.
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Companies That You Expect to Disappear Soon
- Thread starter whhistle
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You can't buy a failing business, change nothing, and expect it to do better.
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michaelh
Member
The usual practice for Private Equity is to buy a failing business on the cheap and asset strip it. However it's difficult to see what assets there were in WHS High St to strip.
Well, quite. Or to merge functions, like Mike Ashley does with the likes of Sports Direct and Karrimor. Again, seemingly not a lot of scope for that with TG Jones.
D6130
Established Member
TGJ in Halifax still open yesterday and seemed to be fairly well-stocked. Again no appreciable difference from when it was WHS.
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3rd rail land
Member
I'd be really interested to know if Modella Capital has made any money from buying the high street arm of WHSmiths. The same with Claires Accessories.
I know these private equity firms buy a failing business cheaply, asset strip it and then run it into the ground to the point it goes bust while pretending to be genuinely trying to turn the business around. However with the 2 businesses I have already mentioned what is there to asset strip?
I know these private equity firms buy a failing business cheaply, asset strip it and then run it into the ground to the point it goes bust while pretending to be genuinely trying to turn the business around. However with the 2 businesses I have already mentioned what is there to asset strip?
Mcr Warrior
Veteran Member
- Joined
- 8 Jan 2009
- Messages
- 17,176
Can property freeholds be sold on, or are the trading premises of these struggling high street firms operated on short leases only?
I think they're predominantly leases, which have been sharply rising over recent years and part of the difficulty maintaining high street spaces.
I think the bigger issue for Poundland is a number of issues, the main being that they just can't compete on range and price with the likes of Home Bargains and B&M and due to all the store closures now it's much likely that a person will have a B&M / HB nearer than the Poundland.
Also, they've had 3-5 years of really poor management who have struggled to really stick to one idea (frozen food, clothing, chilled food, loyalty app, single price point... etc.)
Indeed, and I think two other things.
First is that a lot of the stuff isn't a pound any more, so the brand is diluted. I mean it couldn't last forever with inflation existing but yeah, it's now just as likely that you go in and things are £3, not £1.
Second is that I think a lot of people have realised that per unit, their products are not usually cheaper than the supermarkets. Obviously if you've only a tenner to get by and you need washing powder and some food to get you by a few days then they have a place, but if you can manage to stock up less frequently, it's better buying elsewhere.
Usually that's the case. I think Debenhams was notable for owning a lot of it's stores, but that quickly changed when they were bought out. I think it was broadly, Sell off the stores, massive payout to shareholders, debenhams struggles to pay the leases on the newly sold off stores, debenhams goes into administration.
Well, bearing in mind they never paid the full amount for the purchase, believe it sold for around £40m but they only paid £10m and have told WHS they are not getting any more.
I imagine the idea will be to keep the profitable stores for a short amount of time until a buyer can be found or if no buyer is found then they go the way of Claires after they dump some of their own debt in to the company. So, yes, they'll have made money on TGJ by the time they sell/fold.
3rd rail land
Member
I assume this is legal and there was a clause in the sale contract that allowed this to happen?
"Modella, which has snapped up a string of struggling high street retailers in recent years, paid only £10m upfront to WH Smith, according to documents circulated to its creditors. The remaining £32m was left contingent on TG Jones’ future cash flows."
Yes, was legal. I'm guessing WHS wanted rid that badly that they probably knew they were never going to get the remaining monies. Or at least had a suspicion.
michaelh
Member
They were probably just glad to offload the lease and staff redundancy liabilities.
3rd rail land
Member
Presumably a case of take £10M or continue to make less and less money each year until the high street business started losing money.
It wouldn't surprise me if the high street business was actually making a loss, so the £10m was better than keeping the stores.
Peter Sarf
Established Member
I am inclined to agree. Being local I must try and find out. It might be a decade ago that I had less and less reason t go upstairs and so less chance of noticing when access was no longer ther !.
I get the impression that some sellers at car boot sales are the people who do house clearances or are supplied by them. So they pick up all the power tools when the house is vacated. This is often when the last members of the household have passed away so a good set of diy tools are potentially to be found. There is a neighbour of mine who used to have a few lockup garages full of car boot sale wares and got stuff from house clearance people. He is now a delivery driver and has not time for weekends in fields. Which tells me that car boot sales are not very profitable !.
Larger stores - supermarkets ?. Have more choice and so a low priced but poor value for money item will be available alongside a higher priced but better value item (per Kilogram or Litre etc). To be fair sometimes the cheaper smaller pack is, surprisingly, cheaper per unit of measure though !. But many people seem to have no interest in price per unit. I think that when prices in Poundland drifted above the magic £1 level people no longer saw then as cheap even if they often were not good even value before.
I agree. I think WH Smith needed someone to do them a favour. The cheaper WH Smith high street was sold for then the less value needs to be milked out by Modella. Getting off the hook for the pensions of those staff will be a long term saving for WH Smith.
I've not been to a car boot sale for years now but actually used to work on one with a family friend back in the early 2000s selling mainly stationery but all sorts of odds and ends (one of the most popular 'lines' he would buy factory reject socks in bulk and sell them at 50p a pair - these were actually good quality socks worth £3 - £4 retail a pair probably just with minor flaws you wouldn't even notice...and yet you would still have punters trying their luck with '3 pairs for £1 mate?!'
)They've always had 'dodgy goods' in their DNA just the type of which has changed over time with the pirate CD/DVD period perhaps being the most prolific, used to chat to a few of the 'traders' who ran such enterprises and they basically just bunged the operator a few quid every week so they got a tip off if Trading Standards were on the way!
Even the stalls selling something as simple as chocolate these days is potentially just nicked from the local supermarket!
Yeah friend of mine in high school used to make pirated CDs and sell them on a car boot stall. He'd even go round school taking requests and then bring them in a couple of days laterI've not been to a car boot sale for years now but actually used to work on one with a family friend back in the early 2000s selling mainly stationery but all sorts of odds and ends (one of the most popular 'lines' he would buy factory reject socks in bulk and sell them at 50p a pair - these were actually good quality socks worth £3 - £4 retail a pair probably just with minor flaws you wouldn't even notice...and yet you would still have punters trying their luck with '3 pairs for £1 mate?!'
They've always had 'dodgy goods' in their DNA just the type of which has changed over time with the pirate CD/DVD period perhaps being the most prolific, used to chat to a few of the 'traders' who ran such enterprises and they basically just bunged the operator a few quid every week so they got a tip off if Trading Standards were on the way!
Even the stalls selling something as simple as chocolate these days is potentially just nicked from the local supermarket!
Went to a car boot in south Wales a few years back and every other stallholder seemed to be selling dodgy cigarettes.
Speaking of dodgy sales and companies to disappear soon, I do wonder if the writing is on the wall for these American candy stores. Westminster council have been doing raids confiscating fake Wonka bars and such from these shops. I know they exploit the phoenixing tax loophole, but surely if the council persisted enough the owners would eventually give it up.
Yeah friend of mine in high school used to make pirated CDs and sell them on a car boot stall. He'd even go round school taking requests and then bring them in a couple of days later
Given the statute of limitations, I think I'm now safe to confess that I used to have a weekly visit from a man who had the latest films recorded on VHS tapes.. which I'd rent, then tape-to-tape to make copies that I sold to people at school (including teachers). I had lists (typed on my computer, printed out and photocopied) and could take orders, which I'd then get the following week and copy overnight.
The quality of some of these films was somewhat variable, and tape-to-tape copying was obviously not lossless so things have somewhat moved on with modern-day copying!
I never sold anything on a market or car boot sale like this though. I thought this to be somewhat too risky, plus I was probably too young (I couldn't drive myself, for one!).
Certainly in our area most of the American Candy stores have since become the "Vape & Convenience" type stores which have glaringly bright lights and sales so low it makes you wonder how they can afford to stay open... Hmmmm...
They also do Laundry, but not for clothes.
The TG Jones in York is closing along with the city’s main Post Office, as seen here
www.bbc.co.uk
The York branch was a ‘nice’ one given a refurb towards the end of the WHS era. Upstairs has period features as well. It is however a very large branch and I imagine the rents in somewhere like York were high.
York's main Post Office to close in October
The branch has been located inside TG Jones in Coney Street since 2019.
www.bbc.co.uk
The York branch was a ‘nice’ one given a refurb towards the end of the WHS era. Upstairs has period features as well. It is however a very large branch and I imagine the rents in somewhere like York were high.
STINT47
Member
At the time of purchase WH Smith hight Street stores had reasonable turnover and the selling price was fairly low.
I can see why someone could see the purchase as worthwhile. With some investment in the stores, some new ideas and better promotions they could make money.
The problem seems to be that they have done none of this other than changing the name Smith to Jones. Perhaps they never budgeted for developing the business and or found it to be more expensive than expected?
With less stores and reduced rents there is still hope for the business but it will require good management, investment and creativity. Are the current owners up to it? If not I give the business two to three years.
I can see why someone could see the purchase as worthwhile. With some investment in the stores, some new ideas and better promotions they could make money.
The problem seems to be that they have done none of this other than changing the name Smith to Jones. Perhaps they never budgeted for developing the business and or found it to be more expensive than expected?
With less stores and reduced rents there is still hope for the business but it will require good management, investment and creativity. Are the current owners up to it? If not I give the business two to three years.
I think you need to provide some specific examples of these ideas and promotions.
Most new ideas fail.
Can strongly recommend London Centric's reporting on dodgy high street shops. That has been read by some people in positions of power which has motivated some action at least.
I believe WHSmith High Street was actually profitable! Not greatly, but wasn't loss making.
Morrisons is one to watch because of this, they tend to own their stores. Morrisons has been bought by private equity not too long ago.
jon81uk
Member
Although that could be due to the lack of investment in the stores as well.
If only Currys went under and Comet remained. I liked Comet, like you I hate Currys/PC World. They have one person covering check out and technical queries then loads of people dotted around the store doing who knows what.
I have a bit of an issue with internet sped at the back of my house. The Router is still connected via a filter. Since I now have digital voice I don't need the filter so wanted to connect the router direct to the incoming telephone point. Went to PC World it was like I had just flown in from Mars.