New TOFS owner plots store closures and rent talks with landlords

The New Era at The Original Factory Shop

In a significant move, Modella Capital has recently taken the reins of The Original Factory Shop (TOFS), a beloved discount retailer. Just weeks into its ownership, Modella is already charting a course for a major overhaul. This restructuring is aimed at revitalizing the company and ensuring its future success. With TOFS being a familiar name on high streets across the UK, this new chapter is both exciting and crucial for its loyal customer base.

Restructuring Plans and Potential CVA

Central to Modella’s strategy is the consideration of a Company Voluntary Arrangement (CVA), a process that could involve closing underperforming stores and renegotiating rents. This approach, while necessary for financial health, may unfortunately lead to job losses among the 1,800-strong workforce. A distribution center is also under review, potentially streamlining operations. It’s important to note that a CVA would require creditor and court approval, ensuring all stakeholders have a say. This structured approach aims to safeguard TOFS without unfairly compromising other creditors.

The Background: A Glimpse into TOFS’ History

Founded in 1969, TOFS has become a staple, offering a variety of products from beauty brands like L’Oreal to sportswear by Adidas. Previously owned by Duke Street since 2007, TOFS weathered the COVID-19 pandemic with significant financial support. Duke Street’s decision to sell to Modella, free of bank debt, marked a new beginning. This transition underscores the belief in TOFS’ potential, despite current challenges, reflecting a rich history of resilience.

Modella Capital: A Private Equity Firm on the Move

Modella is not just focusing on TOFS; it’s actively engaged in other ventures. Currently, it’s a finalist in the bidding for WH Smith’s high street arm and is restructuring Hobbycraft, acquired last summer. This flurry of activity highlights Modella’s strategic growth and commitment to transforming retail businesses. Their approach balances operational efficiency with financial prudence, aiming to steer TOFS towards a profitable future.

Competitors in the Mix

The journey wasn’t without competition. modella faced bids from Baaj Capital, Frasers Group, and Poundstretcher, owned by Fortress. Each contender brought unique strengths, but Modella’s vision for transformation clinched the deal. As TOFS moves forward, the dynamics of high street retail will continue to evolve, influenced by these strategic shifts.

Looking Ahead: The Road to Recovery and Growth

While the path ahead is challenging, the potential for growth is evident. Modella’s restructuring efforts could position TOFS for long-term success by adapting to market needs and optimizing operations. Change often brings uncertainty, but with careful planning, TOFS can emerge stronger, continuing to serve its loyal customers. As the retail landscape changes, TOFS stands at a crossroads, poised for renewal and growth under Modella’s guidance.