Two of Britain’s best-known high street retailers, Claire’s and The Original Factory Shop (TOFS), are set to become the first major casualties of 2026, with both chains entering administration and placing approximately 2,500 jobs at risk. The move comes after a turbulent year for both brands, and signals yet another blow to the UK’s struggling retail sector as it battles economic headwinds, shifting consumer habits, and mounting operational costs.
According to Sky News, Claire’s and TOFS, both owned by private equity firm Modella Capital, filed notices of intention to appoint administrators on January 5, 2026—just days after the crucial Christmas trading period. This legal step grants the retailers temporary protection from creditors, offering a brief window to seek buyers or alternative solutions. Together, the two chains operate just over 300 stores across the UK and Ireland, employing roughly 2,500 people.
Modella Capital, which acquired TOFS and Claire’s in separate deals over the past year, cited a combination of weak consumer confidence, adverse government fiscal policies, and continued cost inflation as the primary reasons behind the decision. In a statement reported by BBC, 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.”
The administration process is being handled by Interpath Advisory for TOFS and Kroll for Claire’s. Sources in the insolvency profession told Sky News that the intention is for administrators to continue trading the businesses while actively seeking buyers. This approach reflects a broader trend among struggling retailers, aiming to preserve as many jobs and stores as possible during the search for a buyer or investor.
The financial woes of both Claire’s and TOFS are rooted in a challenging retail climate that has claimed several high-profile victims in recent years. The UK high street has been battered by declining footfall, with data from Sensormatic Solutions showing a 13.1% year-on-year drop on December 23, 2025—the last full shopping day before Christmas. This sharp decline in shoppers was described by Modella as “an alarming drop-off in pre-Christmas footfall,” a factor that proved decisive in the companies’ fate.
Claire’s, a staple for young shoppers seeking affordable jewelry and accessories, has endured a particularly rocky period. In early August 2025, its US parent company filed for bankruptcy protection, reporting $690 million (£508 million) in debt. At that time, Claire’s operated 278 shops in the UK and 28 in Ireland, but had racked up £25 million in losses in the UK alone over the past three years, according to ITV News. Modella stepped in during September 2025, acquiring 156 UK stores and saving around 1,000 jobs, but 145 stores closed and another 1,000 workers lost their positions in the process.
TOFS, meanwhile, has a long history on the British high street, but its fortunes have also waned. The chain, which sells discounted homewares and clothing, made a £5.6 million pre-tax loss in the year ending March 31, 2024. Modella acquired TOFS in February 2025 from Duke Street, another private equity firm, but the business quickly underwent a company voluntary arrangement (CVA), resulting in further store closures and job cuts. As of this week, TOFS operates 140 stores with 1,220 employees, all of whom now face an uncertain future.
Modella’s statement, echoed across multiple outlets including The Guardian and TheBusinessDesk.com, points to a wider malaise afflicting the sector: “A combination of very weak consumer confidence, highly adverse government fiscal policies and continued cost inflation is causing many established and much-loved businesses to suffer badly.” The firm specifically criticized recent government measures, such as Chancellor Rachel Reeves’ budgets, which increased taxes, minimum wage, and employer National Insurance contributions—moves that have driven up operating costs for retailers. One London pub owner, cited by the BBC, reported a £22,000 rise in costs over the past year, much of it due to National Insurance hikes.
Landlords have also played a role in the retailers’ struggles, with demands to reclaim stores adding to the pressure. The shift of TOFS’s head office and distribution center from Burnley to Bolton six months ago, along with negotiated rent cuts on several stores, was not enough to stem the tide. For Claire’s, the loss of its largest concession partner following Modella’s takeover further eroded its market position, while changing consumer behavior among its core teenage audience has diminished footfall.
Despite Modella’s efforts to stabilize the businesses—including emergency restructurings and attempts to adapt to new market realities—both chains remained “highly vulnerable” even before their acquisition. The legacy effects of prior trading, combined with a rapidly changing retail landscape, left little room for recovery. As Modella noted, “In these circumstances, administration is the only option. In both cases, the legacy effects of trading prior to our ownership left them highly vulnerable.”
The collapse of Claire’s and TOFS is not an isolated incident. In 2025, other chains such as Poundland and River Island were forced to restructure to avert collapse. The fate of Wilko, a 400-store chain that failed in 2023 after 90 years of trading, looms large as a cautionary tale. Even as some retailers like Next and Marks & Spencer have managed to gain market share through superior online service and large store networks, smaller and mid-sized chains have struggled to keep pace.
Modella Capital itself has become an increasingly prominent player on the UK high street, having also acquired the historic high street estate of WH Smith—now rebranded as TG Jones—and the arts and crafts retailer Hobbycraft. However, the firm’s growing portfolio has not been enough to insulate it from the sector’s wider challenges.
As the retail industry braces for further turbulence in 2026, the fate of Claire’s and TOFS serves as a stark reminder of the pressures facing traditional brick-and-mortar stores. The ongoing shift to online shopping, coupled with rising costs and wavering consumer confidence, has left even established names vulnerable. For the thousands of employees now facing redundancy, the search for new opportunities begins amid an uncertain economic landscape.
With administrators now in place and the hunt for buyers underway, the future of Claire’s and The Original Factory Shop hangs in the balance—mirroring the precarious state of the UK high street itself.
