Thousands of UK Jobs at Risk as Major Retailers Face Insolvency

The British high street faces another significant blow as both Claire’s Accessories and The Original Factory Shop teeter on the brink of collapse, threatening more than 2,000 jobs across the retail sector. The Original Factory Shop has filed for administration in the High Court, whilst Claire’s is engaging restructuring advisers to manage a potential second insolvency.

Modella Capital, the investment firm that acquired both retailers in 2024, is reportedly attempting to keep creditors at bay shortly after the lucrative Christmas trading period. Under Modella’s ownership, the groups operate from more than 300 stores employing approximately 2,500 people. The firm also owns Hobbycraft, a specialist crafts retailer.

The Original Factory Shop is expected to appoint Interpath Advisory as its administrator, whilst Claire’s has retained Kroll to handle its restructuring proceedings. This development represents a dramatic reversal for Modella Capital, which made a competitive bid for The Original Factory Shop in February 2024, outbidding Baaj Capital in a sales auction. The investment firm subsequently purchased roughly half of Claire’s UK stores from bankruptcy in September, securing approximately 1,000 jobs at that time.

A Modella Capital spokesperson attributed the failures to persistent high street challenges and legacy difficulties inherited from previous ownership. “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 statement read. The firm identified weak consumer confidence, adverse government fiscal policies and continued cost inflation as contributing factors to the retailers’ inability to sustain operations.

The financial distress affecting these retailers reflects broader challenges facing the UK’s retail sector. Traders have increasingly bet against major retail stocks as consumer spending weakens and operational costs rise. Sensormatic Solutions data revealed that footfall on “Super Saturday”, December 20, declined 6.9 per cent year on year, indicating subdued festive trading as shoppers delayed purchases and anticipated discounted inventory.

These insolvencies underscore the escalating difficulties facing established retailers attempting to navigate a deteriorating trading environment characterised by constrained household budgets and lacklustre consumer demand. The collapse of Claire’s and The Original Factory Shop, despite ownership by a significant investment vehicle, demonstrates the severity of the current retail crisis affecting the British high street.