Fears for up to 1,000 TOFS jobs as CVA restructuring plan set to be launched
There are fears that up to 1,000 of the total 2,000-strong workforce at Burnley-based discount retailer, The Original Factory Shop (TOFS), could be at risk of losing their jobs as part of a company voluntary arrangement (CVA) by new owner, Modella Capital.
London-based investment group Modella acquired TOFS, for an undisclosed sum, two months ago from previous owner, private equity firm Duke Street.
Earlier this week it was reported that Modella had engaged restructuring experts at Interpath to work on the CVA, aimed at achieving huge rent cuts among the chain’s 178-strong stores portfolio.
Sky News is reporting that Modella aims to renegotiate rental terms at 88 of the stores.
Store staff have been briefed on the plans, it was claimed.
Creditors will vote on the CVA plan at a meeting in mid-May.
If landlords refuse to offer rental concessions, sources say around half the TOFS outlets could be at risk of closure.
Jobs are also at risk at the Burnley HQ and warehouse operation.
A company statement said: “In response to the challenging retail environment of the last year, The Original Factory Shop (TOFS) has today announced a proposed Company Voluntary Arrangement (CVA) in order to protect the future of TOFS as a business and to allow it to flourish in the future.
“Under TOFS’ plan, which will be subject to a vote by the company’s creditors on May 14, TOFS will adjust its store estate (by, where possible, renegotiating the leases on a number of its stores that are loss-making), return to the deal-centric stock and purchasing strategy it is famous for, invest in online channels, and re-align its support centre and logistics operations.
“All employees have been informed of the CVA proposal.”
It added: “A redundancy consultation will begin with employees in those TOFS stores where the company is seeking to renegotiate the lease, in the event that those negotiations are not successful.
“There will also be a reduction in the number of employees in the company’s head office and warehouse in Burnley.
“There will be no change in the day-to-day running of the business while this plan is implemented, and management will keep all TOFS colleagues updated as the process continues.
“While these changes are necessary, TOFS remains committed to serving our loyal customers across the UK.
“Our plan aims to put the business on sustainable footing, protecting as many jobs as possible, and allowing us to return to offering the exceptional value and deals our customers expect from us.”
TOFS sells beauty brands such as L’Oreal, the sportswear label Adidas and DIY tools made by Black & Decker.
It was founded in 1969 and was acquired by Duke Street in 2007, from the private equity arm of Barclays for £68.5m.
Earlier this year Duke Street was believed to be considering putting the business on the market, but brought forward the potential divestment after interest in a deal.
Potential bidders were said to have included Baaj Capital, Mike Ashley’s Frasers Group and Poundstretcher.
Duke Street had tried to sell the business before, having supported it through the Covid-19 pandemic with a cash injection of more than £10m.
Modella also owns Hobbycraft and recently sealed a deal to acquire the high street arm of WH Smith’s.
