The owner of WHSmith’s former high street business is looking to change its contracts with the Post Office, in a move that could make it easier to close outlets inside its stores.
TG Jones, which was created after private equity group Modella bought WH Smith’s high street arm last year, currently operates 180 Post Office counters across its estate.
According to The Guardian, as many as 60 Post Office outlets could be at risk under a restructuring plan being pursued by Modella, prompting fears that some communities could lose access to local postal services.
The restructuring proposal includes plans to cut rents on dozens of TG Jones stores. If landlords reject the rent reductions and take back leases, up to 150 of the retailer’s 450 shops could close, putting thousands of jobs at risk.
Modella has reportedly told creditors it will amend Post Office contracts so that outlets in stores that lose their leases can close with 56 days’ notice if the restructuring plan is approved. The current notice period is six months.
Creditors are due to vote on the plan next month.
Eight TG Jones stores have already been earmarked for closure, seven of which contain Post Office branches. These are in East Ham, Waltham Cross, Torquay, Hull, Ayr, Middleton and Solihull.
If a TG Jones store housing a Post Office counter shuts, the Post Office would have to find an alternative local site or risk withdrawing the service from the area.
The plans have been criticised by the Communication Workers Union, which warned that affected communities could become “postal deserts”.
CWU executive council member Mole Meade said: “We have been warning governments of all colours for nearly 35 years that outsourcing important social services like the Post Office to companies will put shareholders before communities we serve.”
The Guardian reported that compensation rights for affected stores would also be waived under the restructuring plan. Instead, the Post Office would be offered a payment equivalent to 170 per cent of the estimated profits generated from the closure of a site, such as proceeds from stock sales, with a minimum payment of £500.
The reduced notice period and compensation arrangements would run during the three-year restructuring period to June 2029, after which the Post Office’s rights would return to normal.
Modella said last week that protecting the “iconic 234-year-old business” was its priority as TG Jones battles weaker consumer spending and rising operating costs.
The private equity firm also said the forced name change from WH Smith had negatively affected trade, making store closures and job cuts likely.
“The restructuring plan is designed to protect the substantial core of the store estate and create a stronger, more sustainable business that can continue to serve customers for years to come,” Modella said.
“We are extremely grateful to the many stakeholders who have pledged their support, including the Post Office and Toys R Us.”
Modella had previously promised landlords that TG Jones would become a “hub of the high street”, combining postal and banking services with learning, play and reading products.
The firm is understood to be aiming to relocate any Post Office counters lost through the restructuring into other businesses it owns, including Hobbycraft.
A Post Office spokesperson said it recognised the difficult trading conditions facing TG Jones and other high street retailers.
“It’s regrettable that following the restructuring plan announcement by TG Jones on 7 May, a small number of Post Office branches inside TG Jones stores will close in the coming months,” the spokesperson said.
“We are working hard to find locations nearby to continue offering Post Office services.
“We have a longstanding partnership with TG Jones and we know that post offices drive significant footfall to the high street.”
The Post Office said it would continue working with TG Jones to understand the impact of the restructuring on other stores that host branches.
The developments come after the state-owned Post Office announced plans to close more than 100 branches in late 2024, as it continues to deal with the fallout from the Horizon IT scandal.
WH Smith’s travel stores, located in airports, railway stations and hospitals, were not included in the Modella deal and remain owned by the listed WH Smith business.