Contract Changes Threaten Post Office Counters in TG Jones Stores
The owner of the former WH Smith high street business is seeking to alter contracts with the Post Office to facilitate easier closure of outlets within its stores, raising concerns about the emergence of “postal deserts” in affected communities.
TG Jones operates 180 post offices, and it is reported that up to 60 could be closed under a restructuring plan proposed by Modella, the private equity firm that rebranded the WH Smith high street chain as TG Jones following its acquisition.
Modella’s plan includes significant rent reductions on numerous outlets of the books-to-paperclip chain. Landlords are anticipated to terminate leases rather than accept these rent cuts, which would lead to closures and jeopardize thousands of jobs.
In correspondence to creditors, Modella stated it intends to amend Post Office contracts so that outlets losing their leases can be closed with only 56 days’ notice—less than one-third of the current six-month notice period—if the restructuring plan is approved. Creditors are scheduled to vote on the plan next month.
Eight stores are confirmed to close, seven of which include Post Office counters. These are located in East Ham and Waltham Cross in London; Torquay in Devon; Hull; Ayr; Middleton in Greater Manchester; and Solihull in the West Midlands.
The closure of a store housing a Post Office counter would necessitate relocating the stamps-to-banking service to another local site or potentially result in its complete shutdown in that area.
Union Criticism and Community Impact
The Communications Workers Union (CWU), representing postal workers, has criticized the decision.
Mole Meade, a member of the CWU executive council, stated, “The communities served by Post Offices that would close under TG Jones’s plans would become postal deserts in a modern world.”
At the time of Modella’s takeover, the CWU urged assurances that workers’ terms and conditions would be safeguarded amid concerns the private equity firm might be “carpet baggers looking to asset strip it.”
Meade added this week: “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. All they will do is end up closing down community and crown post offices.”
Compensation and Notice Period Adjustments
Additional rights to compensation are also set to be waived for stores impacted by Modella’s restructuring, according to a document sent to creditors and reviewed by .
Instead, the Post Office would receive a payment equivalent to 170% of the estimated profits from closing a site—such as proceeds from stock sales—with a minimum payment of £500.
The reduced notice period and compensation terms would apply during the three-year restructuring plan through June 2029, after which the Post Office’s rights would revert to standard terms.
Modella’s Statement on Business Survival
Last week, Modella described the survival of the “iconic 234-year-old business” as its “imperative” amid weak consumer spending and rising operating costs. It noted that the forced name change from WH Smith also negatively affected trade, making store closures and job cuts likely.
The private equity group stated:
“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. We are extremely grateful to the many stakeholders who have pledged their support, including the Post Office and Toys R Us.”
Following the acquisition, Modella promised landlords it would expand TG Jones into the “hub of the high street,” targeting 500 outlets combining postal and banking services with learning, play, and reading products.
Modella has indicated that the Post Office has “pledged their support” for the restructuring plan and is reportedly aiming to relocate Post Offices lost under the restructure to other businesses it owns, such as the Hobbycraft chain.
Post Office Response and Ongoing Partnership
A Post Office spokesperson commented:
“We fully recognise the challenging trading conditions that TG Jones and many other high street retailers are facing at the moment.
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. 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.
We will continue to work closely with TG Jones to understand what impact the restructuring plan could have on other stores that host post offices and are potentially at risk of closure. We will also continue to support the many branches inside TG Jones stores not impacted by this announcement, serving thousands of customers every week.”
Additional Context and Ownership Details
The state-owned Post Office, which is still recovering from the recent Horizon IT scandal, remains a key partner in this network.
The WH Smith travel stores, located in railway stations, hospitals, and airports, were excluded from the Modella deal and remain owned by the original publicly traded parent company.
Modella declined to comment on the latest developments.
