THE owner of the popular arts and crafts retailer Hobbycraft is reportedly drawing up plans to close multiple stores across the UK.
Modella Capital, a private investment company which specialises in taking over troubled retailers, is preparing to launch a company voluntary arrangement (CVA) at Hobbycraft as soon as Wednesday, Sky News has reported.
It is believed nine of the chain's stores are earmarked to be closed, with around 100 jobs also being cut, and that 18 more Hobbycraft shops would remain open only if negotiations with landlords over rent reductions were successful.
If negotiations with landlords are not successful it has been reported that the 18 affected stores would also be closed, leading to a further 150 redundancies.
The chain has four stores in Scotland: Glasgow, Edinburgh, Paisley, and Falkirk.
It is understood that a further 97 stores will remain unaffected by the CVA.
A CVA is a formal deal where a struggling business agrees with its creditors to repay part or all of its debts over time, helping avoid liquidation.
There are also expected job losses at the company's head office and distribution operations, according to Sky News.
Last month, Modella Capital bought WH Smith’s non-travel stores in a deal valued at around £76 million.
The Hobbycraft CVA is reportedly expected to be launched shortly before Modella also pursues a restructuring at The Original Factory Shop (TOFS), which it acquired just two months ago.
Hobbycraft chief executive officer 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 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.”
In a statement, a Modella spokesperson said: "Modella Capital is absolutely committed to bricks and mortar retail, at a time when the sector is coming under increasing pressure
"[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."
