UK Retail Faces Fresh Crisis as Major Chains Risk Collapse

The new year has once again brought unsettling news for the UK retail sector, with several prominent chains facing potential collapse. Just days into 2026, reports emerged indicating that The Original Factory Shop (TOFS) and Claire’s UK and Ireland are at significant risk, following a recent rescue attempt for Claire’s just months prior. These developments come on the heels of similar concerns surrounding LK Bennett, which is actively seeking a last-minute buyer to avoid financial distress.

Collectively, TOFS and Claire’s represent a substantial presence in the UK retail landscape, employing approximately 2,500 individuals. Initial reports from Sky News suggested both companies were preparing to file a “notice of intention to appoint administrators,” a move designed to provide temporary protection from creditors. This intention was swiftly confirmed by the companies’ owner, as reported by the BBC.

The two struggling businesses operate around 300 stores combined and are both currently owned by investment firm Modella Capital. Notably, both TOFS and Claire’s had already undergone significant restructuring processes in the previous year. Modella Capital acquired TOFS in the spring of 2025 and Claire’s UK and Ireland business in September of the same year, raising questions about the sustainability of these acquisitions.

Several factors are contributing to the current difficulties. News reports cite increased tax burdens and pressure from landlords seeking to reclaim retail spaces occupied by Claire’s and TOFS as key issues. Disappointing Christmas trading figures have further exacerbated the situation, rendering the continued operation of both chains in their current form “unviable” according to sources.

Interpath Advisory, which previously managed TOFS’ Company Voluntary Arrangement (CVA), is expected to oversee the administration process for that chain, while Kroll is anticipated to handle the administration for Claire’s. It is understood that the administrators will aim to continue operating the businesses while actively seeking potential buyers.

Modella Capital has established itself as a key player in acquiring distressed businesses within the UK, with a portfolio that also includes Hobbycraft and the high street operations of WH Smith (now rebranded as TG Jones). However, the acquisitions of TOFS and Claire’s may have proven overly ambitious, as both businesses presented unique and complex challenges.

Specific operational issues are also playing a role. For TOFS, a recent transition to a new third-party logistics provider is believed to have contributed to its difficulties following last year’s acquisition. Meanwhile, Claire’s largest concession partner opted to terminate its relationship after Modella Capital took ownership, further impacting the business.