Landlords of major discount retailer brace for swingeing rent cuts

The new owner of The Original Factory Shop (TOFS), one of Britain's leading independent discount retailers, is preparing to unveil a package of savage rent cuts for its store landlords.

Sky News understands that Modella Capital - which recently agreed to buy WH Smith's high street arm - is finalising plans for a company voluntary arrangement (CVA) at TOFS.

City sources said the CVA - which requires court approval - could be unveiled within days.

Property sources cited industry rumours that significant store closures and job losses could form part of TOFS' plans, while demands for two-year rent-free periods at some shops are said to also feature.

A spokesman for Modella declined to comment.

Modella, which also owns Hobbycraft, bought TOFS from its previous owner, Duke Street Capital, just two months ago.

Almost immediately, it engaged restructuring experts at Interpath to work on the plans.

Sources have speculated that dozens of TOFS stores could close under a CVA, while a major distribution centre is also thought to feature in the proposals.

Any so-called 'landlord-led' CVA which triggered store closures would inevitably lead to job losses among TOFS' workforce, which was said to number about 1,800 people at the time of the takeover.

TOFS, which sells beauty brands such as L'Oreal, the sportswear label Adidas and DIY tools made by Black & Decker, trades from about 180 stores.

The chain, which was founded in 1969, was bought by the private equity firm Duke Street in 2007.

Duke Street had tried to sell the business before, having supported it through the COVID-19 pandemic with a cash injection of more than £10m.

(c) Sky News 2025: Landlords of major discount retailer brace for swingeing rent cuts