Retailers Claire's and The Original Factory Shop on brink of collapse

The retailers Claire's and The Original Factory Shop (TOFS) are on the brink of collapse, putting more than 2,000 jobs at risk in a bleak start to the new year for the British high street.

Sky News has learnt that the two chains are understood to be filing notices of intention to appoint administrators just days after the conclusion of the crucial Christmas trading period. The filings will buy both Claire's and TOFS temporary breathing space from creditors, underlining Britain's fragile retail environment as the industry's biggest players prepare to report publicly on their festive sales performance.

Money latest: Tesco revives value stripes The two chains, which between them trade from just over 300 stores and employ about 2,500 people, are both owned by the investment firm Modella Capital. It snapped up both TOFS, which was already on the brink of collapse, and Claire's, which had called in administrators, in separate deals over the course of several months last year.

Sources said 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 Claires' and TOFS' shops, had rendered the future of both chains in their current forms unviable. Interpath Advisory, which handled a company voluntary arrangement for TOFS soon after Modella bought the business, and Kroll are expected to handle the TOFS and Claire's administrations respectively, according to sources in the insolvency profession.

One added that the intention was likely to be for the administrators to continue trading the two businesses while seeking buyers. The retail industry continues to face significant headwinds, with data from Sensormatic Solutions showing that retail football on December 23, the last full shopping day before Christmas, fell 13.1% year on year.

Along with the higher payroll costs, which have disproportionately impacted smaller and medium-sized retailers, many industry analysts are warning of a further bloodbath across the sector this year. In 2025, chains including Poundland and River Island were forced to turn to restructuring processes to avert collapse.

Modella also owns businesses including WH Smith's historic high street estate, which it has rebranded as TG Jones, as well as Hobbycraft. In the case of TOFS, the shift to a new third-party logistics provider is thought to have contributed to its challenges following last year's deal.

Claire's, meanwhile, was hit by the decision of its largest concession partner to terminate their agreement 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 the UK stores.

It had previously traded from nearly 300 shops in the UK, but has been hit by changes in consumer behaviour among its traditional teenage customer base. Significant numbers of jobs were lost in restructuring processes prior to Modella's purchase of the business.

Modella declined to comment when contacted by Sky News on Monday afternoon..