The buyer of WH Smith’s high street chain is on the brink of a deal to rescue the British operations of Claire’s, the accessories retailer, in a deal which is nevertheless likely to trigger scores of shop closures.
Sky News has learnt that Modella Capital and Interpath Advisory, the administrator to Claire’s UK and Irish operations, could announce a transaction as soon as Friday.
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Industry sources said that while the deal would preserve parts of Claire’s store portfolio, a significant number of shops are likely to be earmarked for closure subject to negotiations with suppliers and landlords.
Jobs are also likely to be axed at Claire’s UK head office as a result of Modella’s plans, which sources said would include merging functions with those of its TG Jones – formerly WH Smith – and Hobbycraft businesses.
Sky News revealed last week that Modella had agreed the outline of a deal with Claire’s new US-based owner, private equity firm Ames Watson, paving the way for it to buy the UK chain.
Modella saw off competition from rival bidders including Touker Suleyman, the Dragons’ Den judge, and HMV-owner Doug Putman.
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Claire’s trades from 278 stores in the UK and 28 in Ireland, employing about 2,100 people across the combined estate.
Interpath said last month it would keep all shops open while it assessed options for the business.
Modella has emerged from nowhere to become the most prolific investor in bricks-and-mortar retailing in Britain in recent months.
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It also owns The Original Factory Shop, with both that chain and Hobbycraft being put into formal restructuring processes after Modella acquired them.
Claire’s, which has been a fixture in British shopping centres and town centres for decades, is one of the biggest high street chains to fall into insolvency this year.
It has a particular following among teenage shoppers.
The company had been running a sale process prior to its appointment as administrators, but did not manage to secure a solvent deal.
The retail industry has been left reeling by the employers’ national insurance hike announced by Rachel Reeves, the chancellor, last autumn.
Both Poundland and River Island recently survived creditor votes paving the way for them to slash rents and close dozens of stores.
The collapse of Claire’s UK operations came a week after its US parent company filed for Chapter 11 bankruptcy protection.
The company had been owned by former creditors Elliott Management and Monarch Alternative Capital following a previous financial restructuring.
Will Wright, UK chief executive at Interpath, said last month: “Claire’s has long been a popular brand across the UK, known not only for its trend-led accessories but also as the go-to destination for ear piercing.
“Over the coming weeks, we will endeavour to continue to operate all stores as a going concern for as long as we can, while we assess options for the company.
“This includes exploring the possibility of a sale which would secure a future for this well-loved brand.”
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Interpath and Modella both declined to comment.
