The Original Factory Shop puts 1,000 jobs at risk under survival plan

The Original Factory Shop owner Modella Capital is planning to impose steep rent cuts across half the retailer’s store estate, putting nearly 1,000 jobs at risk.

According to Sky News, the private equity owner is planning to renegotiate rents at 88 of the discount chain’s 178 stores as part of a company voluntary arrangement (CVA).

TOFS, which employs about 2,000 people, said it has informed staff about the restructuring plans and has launched a consultation with impacted shop staff in case the rent negotiations are unsuccessful.

It added that a proportion of its 176 head office and warehouse employees based in Burnley are also at risk of redundancy.

TOFS creditors will be asked to vote on the plans at a meeting in mid-May.

The company said in a statement: “In response to the challenging retail environment of the last year, The Original Factory Shop (TOFS) has today announced a proposed Company Voluntary Arrangement (CVA) in order to protect the future of TOFS as a business and to allow it to flourish in the future.

“Under TOFS’ plan, which will be subject to a vote by the company’s creditors on May 14, TOFS will adjust its store estate (by, where possible, renegotiating the leases on a number of its stores that are loss-making), return to the deal-centric stock and purchasing strategy it is famous for, invest in online channels, and realign its support centre and logistics operations.

The retailer added: “There will be no change in the day-to-day running of the business while this plan is implemented, and management will keep all TOFS colleagues updated as the process continues.

“While these changes are necessary, TOFS remains committed to serving our loyal customers across the UK.

“Our plan aims to put the business on sustainable footing, protecting as many jobs as possible, and allowing us to return to offering the exceptional value and deals our customers expect from us.”

The news comes days after fellow Modella Capital-owned retailer Hobbycraft confirmed it was closing nine of its stores as part of a mass restructure of the business.

The crafts specialist said the move will result in up to 126 redundancies, with roles at its Bournemouth head office and distribution centre in Burton-on-Trent also at risk. It added that “a number of other stores” are still being reviewed.

Click here to sign up to Retail Gazette‘s free daily email newsletter