The spectre of Tesco looms high in so many things these days. Take newspaper and magazine distribution. One of the key players distributes to 22,000 retailers, and handles 36% of all UK national newspapers, but here’s the snag. The company is called WH Smiths. Maybe, a few years ago that wasn’t a problem. Sure some retailers might have been concerned about having their stock delivered by a competitor, but such was the standing and dominance of the 200 year old retailer, it seems unlikely it gave that much of a monkeys. The little independent newsagents, or even some of the other chains in the sector, were perhaps too small to have much alternative.
Today, however, Smith’s does not rule the world of magazine and newspaper retail like it used to. Tesco et al offer credible competition. It’s a problem if you want to have them as customers.
But now it’s all change. WH Smith is splitting in two. The traditional retail arm, with its 671 outlets in High Streets and railway station concourses throughout the land will keep the name. The distribution arm will be called Smith’s News.
The distribution arm will raise £70mn in debt; £50mn of this will be used to reduce the overall pension deficit to £38mn. Once the two companies have been separated, Smith’s News will inherit £14mn of this pension deficit, and WH Smith will retain £24mn.
Kate Swann, who is the current boss of the company, will remain the head honcho at WH Smith, while erstwhile sales director Mark Cashmore will be the chief executve of Smith’s News.
Opinion in the city seems mixed on whether the two companies will be worth more separately. On a straight asset count, there will be little difference. But if you believe that success in business is all about people and focus, then it would seem likely that in the long run, the move can only be a good thing.
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