Retail Giants Claire's and The Original Factory Shop Enter Administration Amid Economic Struggles
Published 5 January 2026
Highlights
- Claire's and The Original Factory Shop are entering administration, risking 2,550 jobs across the UK and Ireland.
- Modella Capital, the owner of both chains, cites challenging high street conditions and low consumer confidence as key factors.
- The administration process provides a 10-day protection from creditors while seeking potential buyers.
- Modella Capital has criticized government fiscal policies for exacerbating the financial difficulties faced by retailers.
- The move follows a series of restructures and closures, with Modella previously acquiring WH Smith's high street arm and Hobbycraft.
In a significant blow to the UK retail sector, high street staples Claire's and The Original Factory Shop have entered administration, placing 2,550 jobs at risk. The announcement comes as both chains, owned by private equity firm Modella Capital, grapple with challenging trading conditions and a sharp decline in consumer confidence.
Economic Pressures and Administration Proceedings
Modella Capital, which acquired Claire's in September following its previous administration, has initiated insolvency proceedings for both retailers. The decision grants a 10-day reprieve from creditors, allowing time to explore potential buyers. Modella's statement highlighted the "extremely challenging" climate on UK high streets, exacerbated by an "alarming" drop in pre-Christmas footfall.
The Original Factory Shop, acquired by Modella less than a year ago, has also filed a notice with the high court to appoint administrators. The advisory firm Interpath is expected to oversee the proceedings, affecting approximately 1,200 jobs at the discount homewares chain.
Impact of Government Policies and Consumer Confidence
Modella Capital has pointed to adverse government fiscal policies and continued cost inflation as significant contributors to the financial woes of established retailers. The firm criticized measures by Chancellor Rachel Reeves, which have increased operating costs amid high inflation, further squeezing household budgets.
The economic strain has been felt across the retail sector, with other chains like LK Bennett also seeking administration. A warm autumn and early winter have compounded difficulties for fashion retailers, with recent data indicating a 1.4% drop in fashion sales.
A History of Struggles and Restructures
Both Claire's and The Original Factory Shop have faced ongoing challenges, with the latter reporting a £5.6 million pre-tax loss for the year ending March 2024. Despite efforts to restructure, including relocating its head office and negotiating rent reductions, the chain has struggled to regain profitability.
Modella Capital's recent acquisitions, including WH Smith's high street arm and Hobbycraft, underscore its growing presence in the UK retail landscape. However, the firm's latest moves highlight the precarious state of the high street amid shifting consumer habits and economic pressures.
What this might mean
The administration of Claire's and The Original Factory Shop underscores the broader challenges facing the UK retail sector. As Modella Capital seeks potential buyers, the future of these chains remains uncertain. Should a buyer emerge, it could lead to a restructuring that preserves some jobs and stores. However, without a viable solution, significant job losses and store closures are likely.
The situation also raises questions about the impact of government fiscal policies on the retail industry. As Modella and other retailers voice concerns, there may be increased pressure on policymakers to address the economic conditions affecting high street businesses. The outcome of these proceedings could set a precedent for how similar cases are handled in the future, influencing both the retail landscape and economic policy discussions.
