The Original Factory Shop enters administration

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TOFS (2)

Source: The Original Factory Shop

The Original Factory Shop has about 140 stores

The Original Factory Shop has entered administration, with 1,180 jobs at risk.

The discount chain has appointed administrators at Interpath, after talks with prospective buyers fell through.

TOFS was founded in 1969 and has 137 stores, selling discounted branded clothes, homewares and other general merchandise, plus a range of fmcg including toiletries and snacks.

TOFS owner Modella Capital called it “a very tough decision”.

“We have worked intensively in an effort to save the business, but it is now clear that The Original Factory Shop doesn’t have a realistic possibility of trading profitably again,” said a spokesperson.

“In these circumstances administration is the only option. The legacy effects of trading prior to our ownership left them highly vulnerable. 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.”

A statement from Interpath also blamed “government policies which have led to significant increases in employment costs”.

It said TOFS “had experienced challenging trading conditions, driven by high cost inflation [and] fragile consumer confidence”.

“This was exacerbated by issues with the company’s third-party warehouse and logistics operator, which significantly impacted sales.”

Modella bought TOFS in February last year, when it had about 180 stores. The private equity firm also bought WH Smith’s high street arm in June last year and rebranded stores as TG Jones.

In April TOFS entered a company voluntary arrangement, in which stores were closed, its head office relocated from Burnley to Bolton, and warehousing and logistics handed to third party Unipart.

Stock levels in stores dropped by as much as 30% under the new logistics arrangement, according to a TOFS insider.

Modella originally posted a notice of intention to appoint administrators for TOFS in early January. It then extended the notice while discussions were held with interested buyers.

The Grocer reported on Monday that Modella had received separate bids from two parties interested in taking TOFS on as a going concern, but no deal had been agreed.

It is understod one bidder remains interested in buying stores out of administration.

Interpath said all 137 stores would continue to trade as a going concern while options for the business are assessed.

However, goods bought on or after today (28 January) will be “sold as seen and returns can only be accepted on the grounds that the goods are faulty”.

All refunds will require authorisation of a store manager, according to the statement.

TOFS’s online store is to close with immediate effect.

Rick Harrison, MD at Interpath and joint administrator, said: “TOFS has long been a cornerstone of local high streets up and down the country. Unfortunately, however, trading challenges have impacted the business such that the company had to be placed into administration.

“Over the coming weeks, we will be working closely with TOFS’s dedicated team of employees as we endeavour to operate all stores as a going concern while we assess options for the business.”

TOFS is the second Modella-owned retailer to enter administration this week, after the collapse of Claire’s Accessories on Monday, with another 1,000 jobs and 150 stores at risk.