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High street chains Claire’s and The Original Factory Shop are being put into administration putting about 2,500 UK staff at risk of redundancy, as ITV Business Editor Joel Hills reports
Six days into the new year, and two well-known high street names are already heading for administration.
Private equity firm Modella Capital says it is the “only option” for both Claire’s and The Original Factory Shop, which together employ 2,550 people across almost 300 shops in the UK.
Modella blames an “extremely challenging” trading environment, “an alarming drop-off in pre-Christmas footfall,” and what it calls “highly adverse government fiscal policies” – in plain English: the chancellor’s recent Budget decisions.
It’s true that higher taxes and an increase in the minimum wage have put extra costs on businesses, while consumer confidence has been weak as households grapple with rising prices and unemployment edges up. But not all retailers have struggled.
Claire’s and The Original Factory Shop collapsed into administration on Monday. Credit: PA
On Tuesday, Next reported an “overachieving” Christmas. Aldi and Lidl both recorded strong festive sales, and figures from Worldpanel suggest overall food spending rose – even if shoppers were thrifty, switching to own-label products and discount chains.
Before Christmas, some big names like M&S and Sainsbury’s pointed to months of speculation about tax rises ahead of the Budget as unsettling customers. Leaks, briefings, and warnings emanating from within government may have been unhelpful, but there’s no compelling evidence they caused widespread belt-tightening.
Retail sales did dip in October and November, but the Bank of England reports that bank lending to households and businesses increased, and mortgage approvals held up. People saved more, but in a way that looks more like prudent housekeeping than panic.
“This was a cautious Christmas,” says Catherine Shuttleworth, who runs the digital marketing agency Savvy. “But some retailers still have reasons to celebrate.”
It’s worth remembering that both Claire’s and The Original Factory Shop were already troubled. Both were rescued from insolvency last year, and their current owner has now decided it cannot revive them.
We’ll see what, if anything, can be salvaged from administration.
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