London, England – Britain’s retail sector woke up to a bleak start to the new year. Sky News has learned that the popular department store chains Claire’s and The Original Factory Shop (TOFS) are preparing to file formal notices to appoint directors. This move precedes the announcement of imminent bankruptcy.
2500 jobs up in the wind
The new collapse threatens some 2,500 jobs across more than 300 stores belonging to the two chains, both owned by the investment firm Modela Capital. This comes just days after the end of the Christmas shopping season, which had been hoped to salvage the situation. However, data shows a sharp decline in footfall, down 13.1% compared to last year.
Causes of the crisis: taxes and logistical pressures
Informed sources told Sky News that the renewed collapse is due to a combination of harsh factors, chief among them government policies that have significantly increased the tax burden on the retail sector.
Operating costs are rising due to wages and landlord demands to reclaim large areas of store space. Claire’s was hurt by the termination of its largest franchise partner’s agreement. Meanwhile, TOFS faced logistical problems with a new service provider.
Consumer behavior has changed as Claire’s has struggled to attract its traditional customer base of teenagers whose shopping patterns have changed.
The retail sector: a domino effect of collapses
This crisis is not isolated; in 2025, major chains like Poundland and River Island underwent restructuring to avoid collapse. Modella Capital also manages prominent brands such as Hobbycraft and the TG Jones chain (formerly known as WH Smith). This raises concerns about the fate of these brands as well.
An uncertain future
While administrative appointments offer a temporary reprieve for creditors, analysts warn of a “sectoral catastrophe” this year. This comes amid a fragile economic environment lacking sufficient purchasing power to support physical high street businesses.
