The British high street is facing a challenging period, with two major retail chains, Claire’s and The Original Factory Shop, on the brink of administration. The move puts 2,550 jobs at risk, as the companies’ owner, Modella Capital, a private equity firm, has started insolvency proceedings for both chains.
Modella, which recently acquired the high street arm of WH Smith, renamed TG Jones, stated that the current climate on UK high streets is “extremely challenging,” with data suggesting an “alarming drop-off in pre-Christmas footfall.” The investment group has 154 Claire’s stores after buying about half the UK chain from administrators in September last year.
The 140-store cut-price homeware chain, The Original Factory Shop, which was purchased by Modella less than a year ago from the private equity group Duke Street Capital, has also filed a notice with the high court to appoint administrators. This move would affect around 1,200 jobs.
Modella said in a statement: “This has been a very tough decision. We have worked intensively in an effort to save both businesses, having made last-ditch attempts to rescue them, but neither has a realistic possibility of trading profitably again.”
The likely administration comes only six months after a restructure, during which The Original Factory Shop’s head office and distribution centres shifted from Burnley to Bolton, and it agreed rent cuts on a number of stores. The company has been struggling for some time, reporting a £5.6 million pre-tax loss in the year to 31 March 2024, with sales sliding 1% to £117.5 million despite high inflation in 2023 and 2024.
Modella, which snapped up Hobbycraft in August 2024 and closed a number of outlets in a restructure last spring, has cited a combination of “very weak consumer confidence, highly adverse government fiscal policies and continued cost inflation” as the primary factors behind the decision to call in administrators for Claire’s and The Original Factory Shop.
The news emerges just days after the small upmarket fashion chain LK Bennett filed an application with the high court to appoint an administrator, highlighting the challenging environment faced by retailers in the UK. Consumers are grappling with higher energy and food bills, while concerns about the economic and global political environment have prompted those with spare cash to increase their savings.
As the leading UK fashion retailers, Next and Marks & Spencer, prepare to reveal their latest financial results, the industry will be closely watching to see how they have fared in this tough market.
