Major retailer announces store closures and job losses in huge restructuring amid takeover

Up to 27 Hobbycraft stores could close within weeks amid a major restructuring by the new owner of WH Smith’s high street shops.

The arts and crafts retail chain has more than 100 stores across the UK, and said nine stores will close by July.

This alone would put 126 people out of work. Even more are at risk due to ongoing negotiations between the company and stores’ landlords.

If private investment firm Modella doesn’t secure rent cuts for 18 branches, they too could close, resulting in at least 150 redundancies.

Hobbycraft CEO Alex Wilson said: ‘Hobbycraft is the UK’s leading arts and crafts retailer, with a strong presence across the country and online, fantastic colleagues and loyal and engaged customers.

‘For many, our stores are more than just arts and crafts supplies, they have become places for gaining crafting ideas and inspiration.

‘Very sadly, the strength of our offering has not made us immune to the challenges faced by the retail sector in recent years.

‘Closing stores is always a last resort, and this has been an extremely difficult decision.’

Modella, which specialises in taking over struggling retailers, bought all 480 of WH Smith’s high street stores for £ 76 million last month.

It has already confirmed the disappearance of the WH Smith brand from the high street after 233 years, when it renamed the business ‘TG Jones’.

Now there are fears the stores will disappear with the household name if Modella pursue a similar strategy as elsewhere in its portfolio.

The private investment firm may be about to close up to 40 branches of The Original Factory Shop, a discount chain it bought two months ago.

Modella is expected to launch a company voluntary arrangement (CVA) at Hobbycraft this week.

That’s a formal process to allow a company to pay off its debts.

Modella insists it is ‘absolutely committed to bricks and mortar retail’, even when ‘the sector is coming under increasing pressure’.

Around 13,000 high street stores shut down in 2024. Nearly 170,000 retail jobs were lost.

Shoe Zone blamed insurance hikes and a higher minimum wage, introduced by the Labour government, for its decision to close some of its 297 stores.

A spokesperson for Modella said: ‘Modella understands that high streets provide a vital service to consumers, are an essential source of employment and are key to the future success of local economies.

‘Modella Capital believes that many retailers can thrive on the high street; particularly those with a distinctive offer and a loyal customer base.

‘Where necessary, Modella Capital has the skills and experience to restructure retailers that require it, in order to ensure they create profitable, ongoing businesses that will continue to serve communities and employ thousands of people across the UK.’

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