Hobbycraft faces potential store closures, over 250 jobs at risk under restructuring plan

According to Sky News, nine outlets are set to close immediately, with a loss of around 100 jobs. An additional 18 stores could also face closure unless successful rent negotiations are concluded with landlords, potentially pushing total job losses to over 250.

People familiar with the plans told the news outlet that a company voluntary arrangement (CVA) is expected to be launched as early as Wednesday. The process will allow Hobbycraft to restructure its operations and seek rent reductions, a common route for struggling UK retailers.

Insiders also revealed that some staff cuts are anticipated at Hobbycraft’s head office and distribution centres. The proposed CVA is being overseen by FRP, a professional services firm, and comes just ahead of another expected restructuring effort at The Original Factory Shop (TOFS), a discount chain Modella acquired two months ago.

According to sources, as many as 30 to 40 TOFS branches could shut, resulting in hundreds more redundancies. Interpath Advisory is managing the TOFS process. Despite the looming closures, approximately 97 Hobbycraft stores are not expected to be affected by the CVA, safeguarding around 1,800 jobs.

The dual restructuring efforts at Hobbycraft and TOFS have raised fresh concerns about whether Modella Capital intends to take similar action at WH Smith’s high street operations, which it recently acquired and plans to rebrand as TG Jones.

In a statement issued to Sky News, a spokesperson for Modella Capital 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."

Modella Capital, known for acquiring distressed retail assets, took over Hobbycraft from private equity firm Bridgepoint last summer. Founded in 1995, Hobbycraft has become a well-known name in the UK for its range of arts and crafts supplies.