Claire’s and The Original Factory Shop enter administration

High street retailers Claire’s and The Original Factory Shop are being put into administration, risking 2,500 jobs.

It comes amid a turbulent time for Claire’s, popular with tweens for its brightly coloured accessories, which was seeking a buyer after its US owner filed for bankruptcy last year.

Modella Capital, which owns both chains, said the retailers would enter insolvency proceedings across the UK and Ireland. The administration will give them breathing space to find a new buyer.

Modella said tough trading conditions and “alarming” low Christmas trading left both in a “vulnerable” position.

Claire’s has 154 stores and 1,355 staff, while The Original Factory shop has 140 stores and 1,220 staff.

Modella purchased Claire’s in September, six weeks after its previous collapse into administration, in a deal which saw around 1,000 job losses at the retailer, while 145 stores closed.

The investment firm has owned The Original Factory Shop since early last year.

“This has been a very tough decision,” said Modella. “We have worked intensively in an effort to save both businesses, having made last-ditch attempts to rescue them, but neither has a realistic possibility of trading profitably again.”

Modella said that the chains were “highly vulnerable” even before it bought them. It also blamed challenges including the climate on the high street, which it said “remains extremely challenging”, and government policy.

The two shops are the latest casualties of a tough trading environment which has seen high street sales fall as shoppers move online, ditching old favourites facing the high cost of maintaining brick-and-mortar stores.

“A combination of very weak consumer confidence, highly adverse government fiscal policies and continued cost inflation is causing many established and much-loved businesses to suffer badly,” Modella said.

The investment firm has become increasingly prominent on Britain’s high streets, having bought WH Smith’s high street chain last year and taken over arts and crafts retailer Hobbycraft a year earlier.

Modella is the latest business to criticise measures by Chancellor Rachel Reeves which have seen operating costs rise, making trading even more difficult as high inflation – the price at which prices rise – squeezes household budgets.

Her last Budget hiked taxes, while her previous Budget increased the minimum wage and raised employer National Insurance contributions.

One London pub owner warned he may have to close after tax rises announced in the last Budget.

James Fitzgerald, landlord of the Thatched House in Hammersmith, said his costs have risen by £22,000 over the past year – with the increase in National Insurance a major factor.

The Treasury was asked to comment.