Hobbycraft prepares to close stores and slash jobs in survival restructure

Hobbycraft owner Modella Capital is planning a significant restructuring that could see the closure of several stores and the loss of up to 250 jobs.

The private investment firm is gearing up to launch a company voluntary arrangement (CVA) at the retailer as soon as on Wednesday, Sky News reported.

Sources close to the plans claimed that nine of the chain’s stores would be axed, with the loss of around 100 jobs, while 18 more would stay open if negotiations with landlords regarding rent cuts ended successfully.

They added that an additional 97 Hobbycraft shops would stay unaffected by the CVA, saving 1,800 jobs.

If the discussions with landlords do not pan out as envisaged and the 18 impacted shops are designated for closure, at least 150 further redundancies could follow based on the retailer’s average number of staff per store.

Some job cuts are also anticipated at Hobbycraft’s head office and distribution operations, according to sources.

In a statement, a Modella spokesman said: “Modella Capital is absolutely committed to bricks and mortar retail, at a time when the sector is coming under increasing pressure.

“[Modella] understands that high streets provide a vital service to consumers, are an essential source of employment and are key to the future success of local economies.”

He continued: “Modella Capital believes that many retailers can thrive on the high street; particularly those with a distinctive offer and a loyal customer base.

“Where necessary, Modella Capital has the skills and experience to restructure retailers that require it, in order to ensure they create profitable, ongoing businesses that will continue to serve communities and employ thousands of people across the UK.”

The update comes as Modella Capital prepares to impose steep rent cuts for the The Original Factory Shop’s store landlords.

The private equity owner is finalising its plans for a CVA which could be unveiled within days, Sky News reported.

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