God. Another day, another retail bloodbath. I was literally standing in The Original Factory Shop last week buying discounted Easter chocolate (don't judge me) when an employee whispered something about "big changes coming." Didn't think much of it then. Feel stupid now.
Turns out Modella Capital, who just swooped in and bought the struggling discount chain, has cooked up what corporate types love to call a "survival plan." Translation? They're trying to slash rent costs at 88 of their 178 stores through a Company Voluntary Arrangement (CVA) launched Thursday. And we all know what that usually means.
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What the hell is a CVA anyway?
For those who don't speak corporate-crisis-language, a CVA is basically a last-gasp attempt to keep a business alive by renegotiating debts - mostly rent with landlords. It's teh business equivalent of calling all your creditors and begging for mercy. We've seen this movie before with Caffe Nero and Body Shop. The ending isn't usually happy.
Staff have reportedly been briefed on what's coming. Poor bastards.
2,000 jobs hanging in the balance
The chain currently employs about 2,000 people across its 187 high street locations. A "significant" number of closures are expected, along with job losses that'll hit both stores and head office staff. My neighbor works at their warehouse in Burton - texted me this morning with "already updating my resume." Can't blame him.
Creditors will vote on these plans mid-May, which feels like watching a slow-motion car crash.
The Modella massacre continues...
Here's where it gets interesting (and by interesting, I mean depressing). Modella Capital isn't just gutting The Original Factory Shop. Earlier this week, they announced Hobbycraft - another retailer they own - is shutting at least nine stores by mid-July.
Between 72 and 126 jobs gone. Just like that.
And they're not done yet. Hobbycraft warned that "a number of other stores" are still under review. Back in 2018, I interviewed a retail analyst who told me private equity firms often buy struggling retailers like collecting wounded animals - not to nurse them back to health, but to harvest whatever value remains.
Seems about right.
The bargain store paradox
What's weird about all this is that most discount retailers are actually thriving during the cost-of-living nightmare we're all enduring. B&M and Home Bargains are expanding while The Original Factory Shop can't seem to keep its head above water.
I spent $40 at B&M last weekend on garden stuff I didn't even need. The place was packed. Meanwhile, The Original Factory Shop has closed over a dozen stores in the past year alone.
The contrast is jarring.
Mixed signals or just confusion?
In a twist that makes about as much sense as my ex's explanation for why we broke up, The Original Factory Shop actually opened 27 new stores in 2024 while simultaneously closing others. They're still talking about a "store transformation" program continuing this year.
Listen. When a company is filing a CVA while simultaneously expanding... someone in the boardroom is either a genius or completely delusional.
I reached out to Modella Capital for comment. Still waiting. (Like waiting for that friend who says "I'll definitely pay you back next week" when you lent them $200 six months ago.)
The high street continues its slow, painful transformation - like a ghost at a family reunion, present but fading away before our eyes.
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Did you miss our previous article...
https://hellofaread.com/money/starbucks-just-dropped-their-summer-menu-and-im-already-drooling-over-the-tiramisu-drinks
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