A MAJOR retail chain has revealed plans to permanently shut at least nine stores across the UK, placing up to 126 jobs at risk.
Hobbycraft, owned by private equity firm Modella Capital, is implementing the closures as part of a sweeping restructure announced today.
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The retailer said the nine stores will stop trading by mid-July, affecting between 72 and 126 jobs.
In addition to the store closures, Hobbycraft announced that the restructuring will lead to redundancies at its Bournemouth head office and its distribution centre in Burton-on-Trent.
It added that the future of “a number of other stores” is still being reviewed.
Sky News reported earlier this morning that the chain is preparing to initiate a Company Voluntary Arrangement (CVA), which could ultimately result in the closure of up to 27 stores.
A CVA is a formal insolvency process that allows struggling businesses to reach an agreement with their creditors to reorganise their debts and improve financial stability.
One of the key elements of a CVA is the ability to renegotiate lease terms with landlords.
The company may propose reduced rent payments, sometimes referred to as “turnover-based rent,” where rent is linked to the store’s revenue, or a temporary rent-free period to ease cash flow pressures.
However, if these negotiations fail, the chain could be forced to close a further 18 shops.
Full list of Hobbycraft stores closing
These are all the Hobbycraft stores in the UK that will close by mid-July:
- Bagshot
- Basildon
- Borehamwood
- Bristol Imperial
- Canterbury
- Cirencester
- Dunstable
- Epping Forest
- Lakeside
It was previously reported Modella was looking to negotiate two-year rent-free periods at some shops.
The rest of the chain’s 97 stores will remain unaffected by the shake-up, meaning 1,800 jobs are protected.
However, job losses are also expected at the company’s head office and distribution operations.
Hobbycraft has 124 stores and has a workforce of around 2,400 people.
It’s the largest arts and crafts retailer in the UK, and sells everything shoppers need for art, knitting and crochet, haberdashery, papercraft, wedding and party, baking, jewellery making and more.
The news comes after it was reported Modella was in talks with advisers to restructure its business.
The group bought Hobbycraft, which was founded in 1995, from private equity firm Bridgepoint last summer.
The sale came after Bridgepoint had said it was exploring “strategic options” for the business.
Hobbycraft has today confirmed the nine shops that will close, with them shutting by mid-July.
The closure of the shops will see between 72 to 126 workers lose their jobs.
Alex Willson, Hobbycraft chief executive officer, 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 from 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.
“Making these changes is sadly a necessary action to enable us to keep our doors open to crafters up and down the country.”
Modella, which specialises in taking over troubled retail companies, also recently snapped up WHSmith‘s high street arm.
The parent company is also planning a restructuring at The Original Factory Shop after acquiring it just two months ago.
It’s believed between 30 to 40 of these shops could close, triggering hundreds more layoffs.
The retailer has shuttered more than a dozen stores over the past 12 months, including sites in Great Harwood in Lancashire and Invergordon, Scotland.
Despite this, it opened 27 stores last year and still has plans to continue its “store transformation” programme this year.
Meanwhile WHSmith has said it will close up to 20 stores in the coming weeks after it agreed to sell off nearly 500 of its high street shops.
Stores that have already closed recently or are yet to close include Halstead in Essex, Newport in Wales and Oldham in Greater Manchester.
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