Future of discount chain with 187 shops is uncertain after failing to find a buyer
THE future of one of Britain’s biggest high-street discount chains remains uncertain after failing to find a buyer.
The Original Factory Shop (TOFS), a beloved haunt for bargain-savvy Brits, is teetering on the edge of uncertainty.
Despite its popularity, the discount retailer is struggling to secure a buyer, raising concerns about its future on the high street.
It’s understood that Teneo, a strategic advisory firm, has been called in to explore all options, including another attempt to flog the chain.
However, this could also involve the prospect of store closures or a company restructuring.
A spokesperson for the retailer said: “The Original Factory Shop has been offering communities a great range of products at unbeatable value since 1969.
“Like many retailers, the company continually reviews its outlook and is exploring a range of strategic options.
“The business continues to trade as normal and is expected to perform well over the busy Christmas period.”
It’s important to note that strategic options can mean a variety of different things, and for now, all shops are open for business as usual.
The brand currently trades from 187 stores across the UK.
This isn’t the first time TOFS has been on the market.
Last year, current owners Duke Street Capital, who’ve been at the helm since 2007, tried to sell up through Deloitte, but no deal was struck.
Back in 2013, the chain was valued at over £100million, but recent financial results show a dip in both revenue and profits, ending the year to March 2023 with a pre-tax loss of £286,000.
While discount retailers like B&M and Home Bargains are booming thanks to the cost of living crisis, TOFS seems to be struggling to keep up.
TOFS has shut 10 of its shops over the last 12 months and these were located in:
- Brightlingsea, Essex
- Bodmin, Cornwall
- Chepstow, Wales
- Fakenham, Norfolk
- Harwich, Essex
- Mildenhall, Suffolk
- Padiham, Lancashire
- Taunton, Somerset
- Deal, Kent
- Haverfordwest, Wales
HISTORY OF THE ORIGINAL FACTORY SHOP
FOUNDED in 1969 by the Black family in Keighley, the first shop was part of Peter Black's retail network.
Initially, it focused on selling surplus soap produced by one of Black’s factories, offering local communities great value.
Over the years, TOFS evolved from its humble beginnings, expanding its product range to include clothing, homeware, beauty products, toys, and more.
It became known for offering a diverse selection of well-known brands at discounted prices.
The company grew steadily, reaching 185 stores by 2011 and expanding its headquarters and warehouse in Burnley to accommodate its increasing needs.
In 2007, the chain was acquired by private equity firm Duke Street Capital.
Since then, TOFS has undergone various transformations, including store closures and openings, as it adapted to the changing retail landscape.
Despite these closures, the retail chain has opened 27 stores this year and still has plans to continue its “store transformation” programme next year.
Here is a full list of stores that have opened since August 2023:
- Kirkintilloch – opened August 24
- Stonehaven – opened August 31
- Blandford Forum – opened August 31
- Haddington – opened September 7
- Wetherby – opened September 7
- Nairn – opened September 14
- Ashbourne – opened September 14
- Castle Douglas – opened September 21
- Penrith – opened September 21
- Inverness – opened September 28
- Attleborough – opened September 28
- Ayr – opened October 5
- Ringwood – opened October 5
- Perth – opened October 12
- Lanark – opened October 19
- Peterhead – opened October 26
What else is happening on the high street?
High street retailers have struggled in recent years as shoppers increasingly turn to online retail.
High energy costs and business rates have hit retailers hard.
This has left some businesses grappling with budgets and having no choice but to close stores to cut costs.
Many Brits have turned to second-hand outlets such as Vinted and eBay, making things even harder for charity shops.
Several well-known major brands have fallen into administration including Wilko and Paperchase.
Late last month, Homebase said it would put 74 sites up for sale after it crashed into administration.
However, its administrators were able to strike a deal to sell the business to retail group CDS, which owns bargain chains The Range and Wilko.
This secured the jobs of 1,600 employees and 70 stores – all of which are set to be rebranded as The Range shops.
Why are retailers closing shops?
EMPTY shops have become an eyesore on many British high streets and are often symbolic of a town centre’s decline.
The Sun’s business editor Ashley Armstrong explains why so many retailers are shutting their doors.
In many cases, retailers are shutting stores because they are no longer the money-makers they once were because of the rise of online shopping.
Falling store sales and rising staff costs have made it even more expensive for shops to stay open. In some cases, retailers are shutting a store and reopening a new shop at the other end of a high street to reflect how a town has changed.
The problem is that when a big shop closes, footfall falls across the local high street, which puts more shops at risk of closing.
Retail parks are increasingly popular with shoppers, who want to be able to get easy, free parking at a time when local councils have hiked parking charges in towns.
Many retailers including Next and Marks & Spencer have been shutting stores on the high street and taking bigger stores in better-performing retail parks instead.
Boss Stuart Machin recently said that when it relocated a tired store in Chesterfield to a new big store in a retail park half a mile away, its sales in the area rose by 103 per cent.
In some cases, stores have been shut when a retailer goes bust, as in the case of Wilko, Debenhams Topshop, Dorothy Perkins and Paperchase to name a few.
What’s increasingly common is when a chain goes bust a rival retailer or private equity firm snaps up the intellectual property rights so they can own the brand and sell it online.
They may go on to open a handful of stores if there is customer demand, but there are rarely ever as many stores or in the same places.