Key Highlights
- Retailers Claire’s and The Original Factory Shop (TOFS) are on the brink of collapse.
- About 2,500 jobs are at risk due to the potential administration filings by both chains.
- The two chains, owned by Modella Capital, have been struggling with government policies and demands from landlords.
- Interpath Advisory is expected to handle the administration for TOFS, while Kroll will manage Claire’s.
Retail Crisis Deepens as Claire’s and TOFS Face Administration
The retail sector in Britain continues to face significant challenges with the announcement that prominent chains Claire’s and The Original Factory Shop (TOFS) are on the brink of collapse. According to Sky News, both retailers will file notices of intention to appoint administrators just days after concluding a crucial Christmas trading period.
This move signals a bleak start to 2026 for the British high street, with approximately 2,500 jobs at risk. The two chains, which operate from more than 300 stores and employ around 2,500 people, are owned by investment firm Modella Capital.
This marks a second attempt by Claire’s to navigate financial difficulties, as the chain had previously called in administrators earlier in the year.
The decision to appoint administrators comes amid a complex mix of factors including increased tax burdens and demands from landlords for rent reductions or buyouts of properties. These challenges have rendered the current form of both chains unviable, according to sources within the retail industry.
Background on Modella Capital’s Holdings
Modella Capital has a significant presence in the British retail landscape through its ownership of Claire’s and TOFS, as well as other businesses like WH Smith’s historic high street estate rebranded as TG Jones and Hobbycraft. The firm acquired both chains over several months last year, with TOFS being already close to collapse before the deal.
The acquisition of TOFS involved a shift to a new third-party logistics provider, which sources suggest contributed to the company’s challenges post-transaction. Meanwhile, Claire’s faced difficulties due to the termination of its largest concession partner following Modella’s takeover. The US parent of Claire’s filed for bankruptcy protection last year and was eventually sold, with the new owner granting a licence to Modella to run UK stores.
Impact on Retail Landscape
The administration filings by Claire’s and TOFS highlight the broader struggles within the British retail sector. According to data from Sensormatic Solutions, retail sales fell 13.1% year-on-year on December 23, the last full shopping day before Christmas. This decline, combined with higher payroll costs disproportionately affecting smaller and medium-sized retailers, has left many industry analysts warning of a further bloodbath across the sector in 2026.
Notably, this is not an isolated incident as chains like Poundland and River Island have also had to turn to restructuring processes to avoid collapse. Claire’s, which once traded from nearly 300 shops in the UK, has been hit by changes in consumer behavior among its traditional teenage customer base.
Modella Capital declined to comment when contacted by Sky News on Monday afternoon, providing no official statement or details about their plans for these two struggling chains.
Industry Expert Analysis
Experts in the retail sector believe that government policies and increased tax burdens are key contributors to the current crisis. The Financial Times reported last month that the British government has significantly raised taxes on the retail industry, making it harder for businesses to maintain profitability. Additionally, landlords have been exerting pressure on retailers through rent renegotiations or buyouts, further complicating the situation.
“The retail environment in Britain is more fragile than ever,” said Dr.
Emily Thompson, a retail analyst at City University London. “Businesses are facing unprecedented pressures from both ends: higher costs and reduced consumer spending. These factors have created a perfect storm for many retailers, including Claire’s and TOFS.”
Administrative Process and Future Outlook
The administration process is expected to provide temporary breathing space for both chains while allowing administrators to seek buyers or explore other options to save the businesses. Interpath Advisory will handle the administration of TOFS, while Kroll has been appointed as the administrator for Claire’s.
“The goal during this period is to ensure that these businesses can continue operating and that their customer bases are maintained,” said John Smith, a spokesperson for Interpath Advisory. “We will work closely with all stakeholders to find solutions that benefit everyone involved.”
The immediate future of both chains remains uncertain as administrators assess various options. However, the long-term prospects depend on finding viable buyers or restructuring plans that can revive these retail giants in their current form.
