Modella swoops for Claire’s UK in latest opportunistic deal

Modella Capital, a retail investment boutique, has agreed to acquire more than half of the business and assets of fashion accessory retailer Claire’s UK, which fell into administration in August, 2025 following the collapse of its US parent company.

The deal, which saw Modella acquire 156 of Claire’s 306 UK and Ireland stores for an undisclosed sum, saving around 1,000 jobs, was just the latest in a string of high-profile opportunistic acquisitions that the investor has secured in the UK retail space since last year.

A little over a year ago, Modella was a virtually unknown presence on UK high streets. That changed at the tail-end of August 2024, when the firm acquired Hobbycraft, the UK’s largest arts and crafts retailer, from Bridgepoint for an undisclosed sum.

This was followed in February 2025 by the acquisition of discount chain The Original Factory Shop from private equity owner Duke Street, which had been exploring a sale of the loss-making business for years, and came after talks between Duke Street and Baaj Capital collapsed at the last minute, enabling Modella to swoop in.

Then, in June 2025, Modella struck its most high-profile deal yet, with the acquisition of WH Smith’s high street business for £40 million. What was particularly interesting about the WH Smith deal was the fact that Modella was able to re-trade the price down from its initial offer of £52 million.

As well as chipping £12 million off the purchase price, Modella simultaneously renegotiated far more favourable terms, paying just £10 million upfront, with £20 million deferred depending on cashflow performance up to August 2026 and a further £10 million potentially payable on the value of certain tax assets.

The WH Smith and Claire’s deals, in particular, highlight the modus operandi behind Modella’s activity: opportunistic deals targeting select assets of big-name UK retailers, resulting in acquisitions of streamlined operations.

Modella’s activity has been met with some scepticism, particularly after it restructured Hobbycraft and The Original Factory Shop via Company Voluntary Arrangements (CVA) insolvency processes, resulting in a number of store closures and job losses, with redundancy costs passed on to the taxpayer.

The structure of the Hay Wain Group, which Modella is part of, has also come under scrutiny, with other group subsidiaries including Blazehill, a credit fund that provides loans for chains struggling to borrow from traditional banks, and Retail Realisations, which helps struggling retailers to quickly realise stock assets as cash.

However, the company has argued that CVAs were necessary to cut loss making stores and reset the strategic directions that had led to the retailers struggling. In line with this argument, Modella stated upon acquiring Claire’s Accessories this week that some store closures and job losses would be “inevitable”.

Modella’s high-profile burst of activity comes at a time when retailers continue to face major challenges, as soaring costs, for everything from rent, to staff to power, have been exacerbated by persistently weak consumer sentiment.

This alone would be enough to drive many retailers to financial distress, but coming after the twin shocks of Brexit and COVID-19, the cumulative headwinds the sector has faced over recent years mean it is no wonder that major names are struggling.

Furthermore, M&A activity in the UK retail sector has been largely subdued, with private equity reluctant to enter such an uncertain market and strategic dealmaking solid, but not exactly spectacular.

All of this has opened up a space for opportunistic buyers to pounce on distressed businesses (many with major brand name recognition) and high-value assets at bargain prices. A notable example would be retail giant Next, which has made a number of acquisitions of high-profile brands, domain names and intellectual property assets over recent years.

Despite concerns over Modella’s ultimate intentions (the company was formed just three years ago and Hobbycraft was its first acquisition), and understandable concerns over store closures and redundancies, there are indications that the firm is more than just another investment company picking over the bones of fallen giants.

The Financial Times reported recently that it had seen a strategy pack that Modella shared with landlords, outlining its plans for TG Jones (the rebranded WH Smith). These plans not only included increasing store count from 464 to over 500, but also opening Toys R Us concessions at over half of the stores (currently available at 85 locations) and introducing more than 250 Hobbycraft concessions.

It also reportedly plans to scale up the presence of the Post Office across TG Jones and ultimately establish the chain as a “hub of the high street”, offering, not just toys, books and stationery, but also banking and postal services.

Modella’s deals so far may be opportunistic in nature, but they still represent significant investments and a major show of faith in the UK high street, at a time when most would agree brick and mortar retail is experiencing a steady decline (even Next’s acquisitions have largely focused on IP and e-commerce, leaving behind physical store networks).

Time will tell, but with retail headwinds persisting, Modella’s dealmaking approach and its apparent vision for interlinked brands and services forming multi-purpose high street hubs could point a way forward, not just for retail M&A, but for physical retail more generally.

Here are details of the WH Smith deal:
Find out more about targeting strategic growth through distressed retail sector M&A

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