Discount department store retailer The Original Factory Shop owes creditors north of £100m after being placed into administration.
Richard Harrison and James Clark, of Interpath Limited, were appointed as Joint Administrators of The Factory Shop Limited, trading as The Original Factory Shop (TOFS) on 28 January 2026.
In recent history, and events leading the appointment of administrators, the Company was acquired by Modella Acquisition Co 7 Limited in February 2025. The financial performance of the business prompted the shareholder to explore restructuring options and Interpath were engaged shortly after the completion of the sale to undertake a review.
Having considered the options available to them, Management concluded that a CVA would deliver the optimal solution in the circumstances. Will Wright and Rick Harrison of Interpath were invited to act as Joint Nominees for the proposed CVA. The CVA was approved by over 90% of creditors at the creditors’ meeting on 14 May 2025, at which Will Wright and Rick Harrison were appointed as CVA supervisors to the Company.
Despite the efforts of its management team to drive the turnaround plan, the Company experienced significant supply and distribution issues following the CVA. The transition to a new logistics supplier resulted in understocked stores and missed trading opportunities.
Although operational performance stabilised later in 2025, the business continued to trade at a loss through the key Christmas trading period. The resulting liquidity pressures led to a build-up of creditor pressure and the directors therefore took the decision to file a notice of intention to appoint administrators on 5 January 2026.
Interpath were engaged to undertake an accelerated sales process to assess all options available to the Company and contingency planning in the event a sale of the business was not successful. A wide market outreach generated initial interest, resulting in 16 parties signing NDAs. Three offers for the business were received, two of which were on a going concern basis which resulted in the directors filing a second NOI on 16 January 2026 to allow time to facilitate further due diligence with a view to deliver a solvent transaction.
However, despite the best endeavours of the directors, ultimately neither of the two going concern offers were deliverable. With no transactable solvent offer available, the directors resolved to place the Company into administration on 28 January 2026, with the Administrators continuing to trade from 117 of its 137 stores to maximise returns from stock realisations. The online store has closed.
Throughout the trading period, the Joint Administrators have continued to explore options for a sale of the business and/or certain of its assets, with continued engagement from multiple interested parties. The Joint Administrators are monitoring store performance on an ongoing basis, along with the viability of continued trade, with phased closures implemented where trading is no longer viable.
The Company experienced a decline in revenue in FY25, with turnover reducing from £117.5 million in FY24 to £110.9 million. Gross profit also fell in absolute terms to £53.8 million (FY24: £60.3 million), and the gross margin decreased to 48.56% from 51.33%.
Given the decline in revenue and pressure on margins, the business remained loss-making. The pre-tax loss widened to £11.6 million in FY25 compared with a £5.6 million loss in FY24.
From the date of appointment to 20 February 2026, sales of £7.6 million have been generated with associated trading costs of £2.6 million paid to date with a trading surplus of £5.1 million in the Period.
As for creditors, administrators stated a number of secured creditors with sums owed totalling a combined figure of around £8m, which is still being determined alongside any potential distributions. Regarding preferential creditors, the HMRC is owed £2.9m, while unsecured creditors are owed a combined sum of £114m. It is expected creditors will suffer a shortfall of £110.6m.
