THE future of a discount chain with 187 shops remains uncertain and stores are now at risk.
The Original Factory Shop (TOFS), acquired by private equity firm Modella Capital, has drawn up plans for a radical restructuring.
The ailing high street chain has drafted in advisers to explore a number of options including a company voluntary arrangement (CVA), according to .
Companies often turn to a CVA as a means to stave off insolvency, which could otherwise result in store closures or the collapse of the entire business.
A CVA provides struggling firms with an opportunity to explore strategies to safeguard their future, such as negotiating reduced rent rates with landlords.
It is understood that Modella Capital has enlisted advisers from Interpath to assist with the process.
Sources suggest that the firm is considering a CVA as part of a strategy to shutter an undisclosed number of underperforming stores in an effort to streamline operations and stabilise the business.
Any CVA that results in store closures would inevitably lead to job losses among TOFS' workforce, which is estimated to comprise of 1,800 employees.
Details surrounding the proposed plans, including the timeline for initiating a CVA – a process requiring both court and creditor approval – remain unclear.
It's important to note that any restructuring can mean a variety of different things, and for now, all shops are open for business as usual.
Despite its popularity, the discount retailer struggled to secure a buyer until Modella stepped in four weeks ago.
TOFS was put up for sale for the second time last year under its previous ownership.
Duke Street Capital, which had owned the company since 2007, attempted to offload the business in 2023 through Deloitte, but a deal failed to materialise.
While discount retailers like B&M and Home Bargains are booming thanks to the cost of living crisis, TOFS seems to be struggling to keep up.
The retailer has shuttered more than a dozen stores over the past 12 months, with the most recent closure taking place in Great Harwood, Lancashire.
Modella Capital and Interpath have been contacted for comment.
FOUNDED in 1969 by the Black family in Keighley, the first shop was part of Peter Black's retail network.
Initially, it focused on selling surplus soap produced by one of Black's factories, offering local communities great value.
Over the years, TOFS evolved from its humble beginnings, expanding its product range to include clothing, homeware, beauty products, toys, and more.
It became known for offering a diverse selection of well-known brands at discounted prices.
The company grew steadily, reaching 185 stores by 2011 and expanding its headquarters and warehouse in Burnley to accommodate its increasing needs.
In 2007, the chain was acquired by private equity firm Duke Street Capital.
Since then, TOFS has undergone various transformations, including store closures and openings, as it adapted to the changing retail landscape.
In February 2025, Modella Capital, the owner of Hobbycraft, acquired TOFS.
Today's development is indicative of the harsh retail climate which has plagued high streets up and down the UK in recent years.
Rising costs, coupled with shoppers tightening their purse strings, have placed pressure on businesses and damaged sales.
Bargain retailers such as B&M and Home Bargains have performed better than others thanks to their low price point, but this has created rivalry.
However, much like TOFS, Poundland is also grappling with challenges to remain competitive in the market.
The discount retailer, owned by Pepco, enlisted advisory firm Teneo earlier this month to manage the potential sale of its business.
A significant number of stores could be axed as part of the proposed sale, reports say.
It comes after Pepco said it was looking at "all strategic options" to separate Poundland from its brand.
The Polish group said it might turn its focus to its more profitable businesses in Europe.
Pepco previously warned that upcoming hikes to employer National Insurance Contributions (NICs) and national minimum wage would significantly add to its costs.
Chancellor Rachel Reeves said during her autumn statement last year that she would raise employers' National Insurance contributions (NICs) from 13.8% to 15%.
She also announced a reduction to the threshold at which businesses start paying NI contributions from £9,100 to £5,000.
It's estimated that the move will raise £25billion, costing the equivalent of around £800 per employee for businesses.
Late last year, it was revealed that profits at Poundland also tumbled by £641million in the year to September, with bosses again blaming slow sales amid a poor outlook thanks to measures set out by Reeves.
The firm is not the first business to warn of challenges because of Reeves' Autumn Statement.
The move has been blasted by a number of high street stores including Greggs, Sainsbury's, Next and Halfords, which all said it could force them to raise prices and further bruise the industry.
EMPTY shops have become an eyesore on many British high streets and are often symbolic of a town centre’s decline.
The Sun's business editor Ashley Armstrong explains why so many retailers are shutting their doors.
In many cases, retailers are shutting stores because they are no longer the money-makers they once were because of the rise of online shopping.
Falling store sales and rising staff costs have made it even more expensive for shops to stay open.
The British Retail Consortium has predicted that the Treasury's hike to employer NICs from April 2025, will cost the retail sector £2.3billion.
At the same time, the minimum wage will rise to £12.21 an hour from April, and the minimum wage for people aged 18-20 will rise to £10 an hour, an increase of £1.40.
In some cases, retailers are shutting a store and reopening a new shop at the other end of a high street to reflect how a town has changed.
The problem is that when a big shop closes, footfall falls across the local high street, which puts more shops at risk of closing.
Retail parks are increasingly popular with shoppers, who want to be able to get easy, free parking at a time when local councils have hiked parking charges in towns.
Many retailers including Next and Marks & Spencer have been shutting stores on the high street and taking bigger stores in better-performing retail parks instead.
In some cases, stores have been shut when a retailer goes bust, as in the case of Carpetright, Debenhams, Dorothy Perkins, Paperchase, Ted Baker, The Body Shop, Topshop and Wilko to name a few.
What's increasingly common is when a chain goes bust a rival retailer or private equity firm snaps up the intellectual property rights so they can own the brand and sell it online.
They may go on to open a handful of stores if there is customer demand, but there are rarely ever as many stores or in the same places.
The Centre for Retail Research (CRR) has warned that around 17,350 retail sites are expected to shut down this year.
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