Claire’s and The Original Factory Shop have moved into administration, placing nearly 2,500 jobs in jeopardy. Modella, the parent company of both brands, made the announcement after a series of tough trading conditions and a disappointing Christmas sales performance.
Claire’s also operates 154 stores and provides 1,355 jobs. The Original Factory Shop runs 140 stores and employs 1,220 staff. Modella has added Claire’s to their portfolio, just six weeks after Claire’s latest fall into administration. This prior collapse resulted in the shuttering of 145 locations and the loss of approximately 1,000 employees. The Claire’s US parent company had also declared bankruptcy last year before Modella acquired the brand.
At the same time, the administration process creates tremendous uncertainty for employees and customers. Modella pointed to “alarming” low Christmas trading as being one of the main factors in this decision. Here’s hoping that the company can continue to fight, to save both companies. They knew that neither brand could actually earn a reasonable return trading profitably in today’s environment.
“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.” – Modella
Modella pointed out how retail is grappling with larger economic pressures. She emphasized how weak consumer confidence, bad government fiscal policies, and continued cost inflation are all poisoning the well for many legacy companies.
Their employees and customers are trying to tell them that they’re wrong about the announcement. As a result, they are now dependent on these retailers for value fashion accessories and home goods. Claire’s is a must for tweens who are all about the sparkly, shiny, colorful accessories. The Original Factory Shop draws customers with its huge variety of deeply discounted goods.
Going forward in the administration process, stakeholders are closely watching moves in this space. What they really want is a deal that saves jobs and avoids the stores being shuttered.