More job losses and closures as Tofs CVA is approved

By

Barbara Santamaria

Published
Jul 10, 2018

The Original Factory’s CVA proposal has been approved by creditors this week, allowing the struggling UK retailer to shed around 10% of its store estate. The move puts an estimated 290 jobs at risk of redundancy.

32 Tofs stores are expected to close under the CVA, an insolvency procedure, including branches in Brighton, Dumfries, Salisbury, Stockbridge and York.

The process will help the embattled retailer restructure its debts and close loss-making stores after seeing its profits drop by £3.1 million last year despite revenues increasing by £5 million to £190 million.

The Original Factory Shop has blamed both macro-economic factors and internal issues for its struggles, saying that performance in early 2018 led to liquidity pressures and breach of banking covenants.

The CVA will be supported with a £10 million emergency cash injection provided by private equity firm Duke Street

Tofs’ CVA follows that of other high-profile retail companies including House of Fraser, New Look and Mothercare in a battle for survival amid changing customer habits, the rise of e-commerce and growing overhead costs.

However, The Original Factory Shop is one of the first value retailers to fall victim to the high street crisis. Founded in 1969, the retail company focuses on selling big brands for the family at factory shop prices, and sells everything from garden and DIY products to ready to wear and beauty essentials.