New TOFS owner ‘considering CVA’ to close underperforming stores and reduce rents

The new owner of Burnley-based TOFS (The Original Factory Shop) is considering a CVA (Company Voluntary Arrangement) in a bid to shut stores and reduce rent levels in its portfolio of around 180 shops.

Discount retailer TOFS was acquired last month, with no remaining bank debt, by Modella Capital from previous owner, private equity firm Duke Street, for an undisclosed sum.

Modella is now in talks with business adviser, Interpath, on options for the business, including a potential CVA, according to Sky News, which would inevitably lead to job losses among the 1,800-strong TOFS workforce.

A CVA would see the closure of under-performing stores and talks with landlords over rent reductions.

Reports claim a TOFS distribution centre will also be the focus of restructuring plans.

TOFS was founded in 1969 and was acquired by Duke Street in 2007.

Last June Duke Street, which made a £10m investment into TOFS during the Covid-19 pandemic, instructed Deloitte to scrutinise a range of unsolicited approaches for the retailer.

Bidders were said to have included Baaj Capital, Mike Ashley’s Frasers Group and Poundstretcher.

Duke Street paid the private equity arm of Barclays £68.5m for TOFS in 2007 and was believed to be considering putting the business on the market this year, but brought forward the potential divestment after interest in a deal.