Rachel Reeves’s tax hikes have been blamed after two major retailers fell into administration.
Claire’s and The Original Factory Shop (TOFS) collapsed putting a combined 2,500 jobs at risk amid ‘extremely challenging’ conditions on the high street.
Modella Capital, the owner of both chains, said ‘highly adverse government fiscal policies’ were among the factors crushing the sector.
It said it had been working ‘intensively’ to save both businesses but that ‘neither has a realistic possibility of trading profitably again’ and that administration was ‘the only option’.
Tory business spokesman Andrew Griffith said: ‘The collapse of familiar high street chains are the tip of an iceberg of firms being decimated by higher rates, employment costs and low consumer confidence. It’s a January wake up call for the Chancellor to act before more damage is done.’
Claire’s has been hit by higher taxes and ‘an alarming drop-off’ in business
Firms have been grappling with fragile consumer confidence as well as an avalanche of costs imposed by the government including higher employer national insurance, a raft of new workers’ rights and a sharp rise in the minimum wage, as well as Labour’s botched business rates reform.
Claire’s and TOFS, which between them operate from just over 300 stores, were both snapped up by Modella in separate deals when they were previously in trouble last year. Modella also owns the former high street operations of WH Smith, which has been rebranded as TG Jones.
A spokesperson for Modella said in a statement: ‘The climate on the High Street remains extremely challenging, and TOFS and Claire’s are not alone in experiencing difficulties.’
The statement said there was evidence of ‘an alarming drop-off’ in pre-Christmas shopping visits.
And the company added: ‘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.
‘It’s a simple fact that if retailers can’t make money, they risk having to close – and jobs across the country are lost.’
The demise of the chains, first reported by Sky News, marked a bleak start to a crucial week for the UK high street as major retailers from Marks & Spencer to Next report on their performance over the festive period.
Next today raised its profit forecast again after a bumper Christmas that saw it defy the gloom on the high street.
It comes days after it emerged that another retailer – LK Bennett – was also on the brink of collapse and urgently seeking a buyer.
They are just the latest victims of tough conditions on the high street.
Last year, Poundland was forced into a restructuring and the closure of dozens of shops after it faced a cash crunch. Meanwhile, River Island closed 33 stores as it battled for survival.
The revelation that Claire’s and TOFS are on the brink adds to signs of a bleak Christmas period – the most important time of the year in the high street calendar which can make or break many firms.
That has partly been blamed on the late timing of Rachel Reeves’s late November Budget, which dampened consumer sentiment as households worried about tax hikes – and prompting accusations that the Chancellor ruined Christmas.
Retail sales fell in November, according to most recent official figures. And separate survey evidence from the CBI suggested that the gloom extended into December.
Last week, leading analyst Clive Black issued a scathing research note pinning the blame on ‘the dire performance of Rachel Reeves and her appalling late 2025 Budget’.
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