Hobbycraft could see nine of its stores close with 18 more at risk as its parent company undergoes a radical restructuring. Modella Capital, who also owns WH Smith’s high street stores, is drawing up plans to close nearly a quarter of the stores.
The private investment firm specialises in taking over retailers in financial trouble and is reportedly preparing to dish out a company voluntary arrangement (CVA), according to Sky News. This allows for businesses facing difficulties to negotiate repayment plans to avoid liquidation. The new plans would see roughly 100 jobs lost, with potential for this figure to rapidly increase if more stores face closure.
The 18 stores at risk will only remain open if talks with the landlords over rent reductions prove to be successful. If not, they too will face closure, triggering at least 150 further job losses.
Hobby Craft’s other 97 stores across the UK will remain unaffected by the arrangement.
Modella also plans to restructure The Original Factory Shop (TOFS) which it acquired two months ago. The CVA for Hobby Craft is expected to be launched before the radical changes take place across its other companies.
An industry insider warns that 30 to 40 TOFS branches could close, meaning hundreds more retail workers would be out of a job.
A Modella spokesman said: “Modella Capital is absolutely committed to bricks and mortar retail, at a time when the sector is coming under increasing pressure.
“[Modella] understands that high streets provide a vital service to consumers, are an essential source of employment and are key to the future success of local economies.
“Modella Capital believes that many retailers can thrive on the high street; particularly those with a distinctive offer and a loyal customer base.
“Where necessary, Modella Capital has the skills and experience to restructure retailers that require it, in order to ensure they create profitable, ongoing businesses that will continue to serve communities and employ thousands of people across the UK.”
