High street chains Claire’s and The Original Factory Shop are poised to appoint administrators, placing more than 2,000 jobs at risk after a challenging festive period, according to reporting from Sky News.

Both retailers, owned by investment firm Modella Capital, are understood to be filing notices of intention to appoint administrators just days after Christmas trading concluded. The notices provide temporary protection from creditors while options are explored. The two chains operate just over 300 stores and employ about 2,500 people.

Interpath Advisory and Kroll are expected to oversee the processes for The Original Factory Shop and Claire’s respectively, Sky News reported. One insolvency source told the outlet that administrators were likely to keep both businesses trading while seeking buyers. Sky News also reported that “a combination of government policy, with a significantly increased tax burden on the retail industry, and demands from landlords to take back swathes of Claire’s and TOFS’ shops, had rendered the future of both chains in their current forms unviable,” attributing the assessment to industry sources.

Claire’s posted a pre-tax loss of £4 million in the year to February 2024 and has faced rising financial pressure. In August, the company appointed administrators from Interpath for its UK and European Services units after it couldn't secure a buyer, before confirming Modella Capital agreed to buy most of Claire's UK.

The US parent of Claire’s filed for bankruptcy protection last year and was subsequently sold, with the new owner granting a licence to Modella to operate UK stores. Claire’s has reduced its footprint in the UK from nearly 300 shops as it contends with changing consumer behaviour among its core teenage customer base. Earlier restructuring processes resulted in significant job losses prior to Modella’s purchase.

Modella also owns WH Smith’s historic high street estate, rebranded as TG Jones, and Hobbycraft, Sky News reported. Sources cited by Sky News said TOFS’ shift to a new logistics provider compounded recent operational challenges, while Claire’s largest concession partner terminated its agreement following Modella’s takeover.

---