The Original Factory Shop, founded in 1969, has gone into administration, leaving some 1,180 jobs at risk. Administrator Interpath says the closure was brought about by adverse trading conditions and higher staff costs arising from Government policies.
Rick Harrison and James Clark from Interpath were appointed joint administrators to The Factory Shop Ltd, trading as The Original Factory Shop, on 28th January. The discount retailer sells a wide range of branded and own-sourced products, including clothing, homewares, beauty items, toys and seasonal goods.
"In common with other high street retailers, the company had experienced challenging trading conditions, driven by high cost inflation, fragile consumer confidence and Government policies which have led to significant increases in employment costs," states Interpath. "This was exacerbated by issues with the company’s third-party warehouse and logistics operator, which significantly impacted sales."
Its 137 shops will continue to trade as a going concern while options are assessed, but the online shop has closed.
Rick Harrison, MD at Interpath and joint administrator, says: “The Original Factory Shop has long-been a cornerstone of local high streets up and down the country. Unfortunately, however, trading challenges have impacted the business such that the company had to be placed into administration.
“Over the coming weeks, we will be working closely with TOFS' dedicated team of employees as we endeavour to operate all stores as a going concern while we assess options for the business.”
Nick Stockley, partner at law firm Mayo Wynne Baxter, comments: "The Original Factory Shop’s travails sadly are wholly unsurprising. There appears to be a general lack of demand for The Original Factory Shop’s current product range and that seems unlikely to change. Any potential buyer will have to give the business a completely new direction because 'more of the same' is unlikely to provide better results. There may be fiscal factors at play as well but the underlying weakness of The Original Factory Shop offering over time is more telling.
"The concerns about the effect of the Government tax policies are being felt, it is very much survival of the fittest on the high street. The administrators may sell on individual branches that still retain some profitability but it seems very likely that many shops, if not all, will close and The Original Factory Shop’s presence on the high street may well disappear completely. There will be some value to the unsold stock but any business buyer will be looking to purchase that stock at a significant discount. The Original Factory Shop may operate at a reduced level generally but the inherent weakness in the brand must be addressed.
"Difficult Christmas trading often results in the final demise of a struggling business and that appears to be the case with The Original Factory Shop. Other businesses must take note that large-scale operations are suffering generally and being an established high street brand is, by no means, a guarantee of commercial success."
