WH Smith has been forced to slash the price of its high street business in a last-minute renegotiation after recent trading worsened.
The retailer revealed that, while the sale of the high street chain to Hobbycraft owner Modella Capital completed on Monday, the cash returns from the sale would now be lower than first expected.
It said it now expects to receive gross proceeds of up to £40 million, down from the £52 million it first forecast.
WH Smith said investment firm Modella had sought to renegotiate the price due to “softer” recent trading.
“Following the agreement and announcement of the sale, the future of the high street business under a change of ownership has led to a more cautious outlook amongst stakeholders,” it said.
WH Smith added that it agreed to renegotiate on the price “given the original agreement was no longer deliverable”.
Shares in WH Smith – which is now purely focused on its shops based at travel sites in the UK and worldwide – fell as much as 8% at one stage, before settling around 3% lower in midday trading on Monday.
The sale to Modella agreed in March – initially valuing the high street chain at £76 million – will result in the WH Smith name disappearing from British high streets and being replaced by brand TGJones.
All of the approximately 480 stores and 5,000 staff working for the high street businesses will move under Modella’s ownership as part of the deal.
The sale comes after years of under-pressure trading at the division, while WH Smith’s travel business has grown to make up the bulk of the group’s sales and profits, with more than 1,200 stores across 32 countries.
WH Smith’s half-year results in April showed the profits at the high street chain had slumped by a quarter to just £20 million.
Buyer Modella specialises in investing in retailers.
It has previously put money into chains including Paperchase and Tie Rack, while in August last year it snapped up arts and crafts retailer Hobbycraft for an undisclosed sum.