Retail groups Claire’s and The Original Factory Shop are close to entering administration after their owner, Modella Capital, said insolvency proceedings have been started for both chains.
The development put 2,550 jobs across the UK in jeopardy.
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Modella acquired the US-based Claire’s in September, just weeks after the accessories retailer had entered administration for a second time.
That transaction followed an earlier collapse, which led to around 1,000 redundancies and the closure of 145 outlets.
After purchasing roughly half of Claire’s UK estate from administrators, Modella continued to operate 154 stores nationwide.
Advisory company Kroll is expected to oversee the proposed administration process for Claire’s.
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By GlobalDataThe move could impact 1,350 roles across the chain, which specialises in fashion accessories and ear piercing.
In a separate development, UK-based The Original Factory Shop has submitted a notice to the High Court seeking the appointment of administrators.
The 140-store discount homewares retailer was bought by Modella less than a year ago from Duke Street Capital. Around 1,200 jobs are understood to be at risk.
Under the filing, advisory business Interpath would be appointed, granting the business a ten-day moratorium from creditor action while discussions over its future take place, reported The Guardian.
The filing comes six months after The Original Factory Shop completed a restructuring programme that included moving its head office and distribution centre from Burnley to Bolton, alongside securing rent reductions at several locations.
Modella said both retailers were already in a fragile position before being acquired, pointing to ongoing pressures such as the condition of the high street, which it said “remains extremely challenging”, as well as the impact of government policy.
The potential administrations come amid sustained declines in UK high street sales, as shoppers continue to shift online and retailers grapple with the costs associated with operating extensive physical store networks.
Modella said: “This has been a very tough decision. We have worked intensively in an effort to save both businesses, having made last-ditch attempts to rescue them, but neither has a realistic possibility of trading profitably again.”
