What Went Wrong for HobbyCraft?

Customers are dismayed at the news of several HobbyCraft sites closing soon, but is the retailer really facing its end?

In yet another blow to the British high street, HobbyCraft announced at the end of April that it would be looking to close down some of its stores sometime in July. Thankfully, though, these closures are only planned for nine of its sites.

This will bring little comfort to the 126 workers whose jobs are at risk, but it does allow the arts and crafts supplier to continue trading in the mid-term.

Another 18 branches are also at risk, however, with HobbyCraft attempting to negotiate a rent reduction with their respective landlords. Should these negotiations fail, another 150 job losses could follow.

Further redundancies are expected at their head office and distribution sites too, though HobbyCraft spokespeople have declined to comment on how many jobs will be affected.

Closures a “last resort”

CEO of HobbyCraft, Alex Wilson, described the closures as a “necessary action”. Referring to the 97 so-far unaffected stores, he explained that the changes “enable us to keep our doors open to crafters up and down the country.

“Very sadly, the strength of our offering has not made us immune from the challenges faced by the retail sector in recent years”.

The retail head added that “closing stores is always a last resort and this has been an extremely difficult decision”.

A familiar issue?

Like most pre-internet chain-stores, HobbyCraft suffer from operating out of multiple large premises that are expensive to run. As online shopping started to cut into the profits of the high street, those trading out of premises with a large footprint found that the combined costs of utilities, business rates and staffing started to become unwieldly.

Spiralling energy costs and gradual increases to National Minimum Wage have only served to tighten the purse strings of companies since.

On its own, this issue could potentially be navigated around. Once other external pressures such as a cost-of-living crisis and increased online competition are added however, then we start to see why so many high street retailers are struggling.

Mixed performance

While Hobbycraft’s trading has seen some ups and downs, they’ve actually posted relatively solid figures in recent years.

2014 saw the retailer’s profits halve as large chains such as Aldi, Lidl, Amazon and Poundland started to move into the arts and crafts space, while a fifteen-year lease taken out on a £3m warehouse also made a dent in the company’s finances.

A handful of different heads have overseen a clawing back at some of that lost revenue since then, though a 2022 statement admitted that the cost-of-living crisis and increased shipping costs were starting to provide some problems for them.

Late 2024 saw HobbyCraft sold to retail investment group, Modella Capital. The new owners had previously had Ted Baker licensee, No Ordinary Designer Label Ltd as part of their portfolio before it collapsed into administration.

Parent company looking to restructure

Modella Capital is chaired by Steve Curtis, who is no stranger to attempting to rescue failing high street firms. As well as Ted Baker, he oversaw the recovery efforts and eventual sales of Paperchase, Tie Rack, and Jigsaw.

Since then, Modella has been prolific in building up its portfolio. The investment group have picked up The Original Factory Shop, WH Smith, and unsuccessfully tried to buy The Body Shop out of administration.

If that sounds like a current who’s who of distressed businesses, that’s because Modella seem to actively seek them out.

A spokesperson for the group explained that “Modella Capital is absolutely committed to bricks and mortar retail at a time when the sector is coming under increasing pressure.

“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”.

CVA already in place

The Insolvency Service shows that HobbyCraft entered into a company voluntary arrangement (CVA) on 13^th May 2025.

A CVA is a formal insolvency procedure that allows companies to continue trading while they negotiate payment plans with their creditors. HobbyCraft’s attempt to reduce their rent payments may well be part of their CVA.

It’s understood that Modella Capital are also planning to enter into a CVA for The Original Factory Store.

Modella will be hoping that this restructuring will allow HobbyCraft to continue trading for years to come, potentially creating a decent profit for them should they come to sell in the future.

Need help to pay off creditors?

CVAs aren’t just the preserve of large nationwide chain stores. If you think that your business may be able to prosper if it just had chance to restructure its debts, a CVA may be the perfect option for you.

Forbes Burton provides free initial consultations for owners of limited companies. Call one of our friendly advisers on 0800 975 0380 or email advice@forbesburton.com to find out if a CVA would be suitable for your situation.