Two major UK high street chains, Claire's and The Original Factory Shop (TOFS), are teetering on the edge of administration, putting approximately 2,500 jobs in jeopardy. Sky News has learned that both retailers, owned by investment firm Modella Capital, are understood to be filing notices of intention to appoint administrators.
A Bleak Start to 2026 for Retail
The potential collapse comes just days after the crucial Christmas trading period, casting a dark shadow over the new year for the British retail sector. The filings will provide both companies with a temporary respite from their creditors, highlighting the ongoing fragility of the UK's retail environment. This news emerges as the industry's larger players prepare to publicly report their festive sales figures.
Modella Capital acquired both struggling businesses in separate deals last year. It took over TOFS when it was already on the brink and purchased Claire's after it had entered administration. The chains collectively operate from just over 300 stores across the country.
Mounting Pressures Force Crisis
Sources indicate that a toxic combination of factors has made the future of both retailers untenable in their current forms. These include a significantly increased tax burden on the retail industry from government policy and demands from landlords to reclaim large portions of their shop estates.
Furthermore, each chain faced unique operational challenges following Modella's takeover. TOFS struggled with a shift to a new third-party logistics provider, while Claire's was hit by the termination of an agreement with its largest concession partner after the acquisition.
Claire's, which once traded from nearly 300 UK shops, has also been adversely affected by shifting consumer behaviour among its core teenage customer base. The company's US parent filed for bankruptcy protection last year before being sold, with the new owner licensing the UK operation to Modella.
Administrators to Seek Buyers as Sector Struggles
According to insolvency profession sources, Interpath Advisory and Kroll are expected to handle the administrations of TOFS and Claire's respectively. The intention is likely for the administrators to continue trading both businesses while seeking potential buyers.
This crisis underscores the severe headwinds continuing to buffet the retail sector. Data from Sensormatic Solutions showed that retail footfall on 23 December, the last full shopping day before Christmas, fell by 13.1% compared to the previous year.
Alongside rising payroll costs, which disproportionately impact small and medium-sized retailers, many analysts are warning of further turmoil across the sector in 2026. The year 2025 saw chains like Poundland and River Island forced into restructuring deals to avoid collapse.
Modella Capital, which also owns the rebranded WH Smith high street estate (TG Jones) and Hobbycraft, declined to comment when contacted by Sky News on Monday afternoon.
