Discount retailer The Original Factory Shop has fallen into administration putting 1,180 jobs at risk.
Administrators Interpath said the outlet had experienced challenging trading conditions, driven by rising costs, fewer shoppers, and government policies which led to “significant increases” in staff costs.
The chain’s 137 shops will continue to trade as normal as the administrators assess options, but the company’s online shop is closing with immediate effect.
It was sold less than a year ago to private equity firm Modella Capital, which also owns TG Jones, formerly WH Smith, and Hobbycraft.
Founded in 1969, The Original Factory Shop sells a wide range of branded products including fashion, perfumes and toiletries.
Rick Harrison, managing director at Interpath and joint administrator, said: “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.”
Interpath said the retailer’s sales were also hit by “issues with [its] third-party warehouse and logistics operator”.
Modella Capital began insolvency proceedings for The Original Factory Shop earlier in January along with accessories chain Claire’s, which it also owns and is still looking to sell.
The news comes as UK retailers come out of a tough Christmas and New Year’s trading period, where sales fell flat across what is usually a bumper period for retailers.
The introduction of higher staff National Insurance contributions and higher minimum wage have raised costs for retailers.
At the same time, customer budgets have been squeezed as inflation – the rate at which prices rise – continues upwards, though it has fallen from highs seen in recent years.
