High Street Firms Face Collapse, 2,550 Jobs Threatened

Two familiar names on Britain’s high street are teetering on the edge of administration, putting 2,550 jobs in jeopardy and underscoring how brittle retail has become. Private equity owner Modella Capital has begun insolvency steps for Claire’s and The Original Factory Shop, saying the trading environment is “extremely challenging” and that a worrying drop in pre-Christmas footfall left no viable path to profitable trading. The move would put about 1,350 roles at the accessories and ear‑piercing chain and roughly 1,200 positions at the discount homewares retailer at risk. Modella bought roughly half of Claire’s in September and now runs 154 UK stores. Advisers from Kroll are expected to be appointed to handle the potential administration. The Original Factory Shop, acquired by Modella less than a year ago from Duke Street Capital, has filed a notice at the high court to appoint administrators and has 140 stores. That filing triggers a 10‑day protection period from creditors while its future is negotiated; Interpath is lined up to act as administrator if appointed. The Original Factory Shop has been struggling for some time. In the year to 31 March 2024 it recorded a £5.6m pre‑tax loss, with sales slipping 1% to £117.5m despite the inflationary backdrop in 2023–24. The chain had already undergone a restructure earlier this year, moving its head office and distribution centre and negotiating rent reductions on some sites. Modella – which has also acquired the high‑street arm of WH Smith (rebranded TG Jones) and bought Hobbycraft in 2024 – said it had made last‑ditch attempts to rescue both businesses but that a combination of weak consumer confidence, unfavourable government fiscal decisions and ongoing cost inflation left them unable to trade profitably. This double blow comes amid wider strain on mid‑market fashion and homeware retailers. A warm autumn and early winter dented clothing sales, with the latest Numerator UK clothing survey showing a 1.4% fall in the four weeks to 7 December. Households squeezed by higher energy and food bills have been saving more and spending less — a dynamic that favours retailers with strong online offers and large store networks. Smaller chains without that scale are increasingly vulnerable: LK Bennett filed for an administrator earlier this week, threatening about 280 roles. For shoppers and staff alike, the fallout from these insolvencies will be closely watched as the sector heads into what should be its crucial trading period. --- Managing your business finances? TaxAce provides smart online accountancy services for UK businesses with flexible monthly plans. Image and reporting: https://www.theguardian.com | Read original article