The Original Factory Shop has had its CVA approved by creditors, which will see the closure of around 10 per cent of its store estate and place scores of jobs at risk.
The retailer, popularly known as Tofs, first launched its CVA proposal last month and will now close down 32 of its 224 stores while reduce rents on the rest from August 1.
The CVA will also lead to the closure of Tofs’ distribution centre.
The retailer’s private equity owner Duke Street has also negotiated a £10 million emergency cash injection deal with lenders, although this is subject to a reduction in costs being achieved.
The exact number of how many jobs will be at risk or placed under review as a result of the CVA has not been made public.
A Tofs spokeswoman said the CVA approval would put ”the business on a much stronger, financial footing” to achieve its turnaround plan.
“While this is a tough measure, reflective of the broader retail environment, it is good news that Tofs will be in pole position to push ahead with their new journey to growth strategy,” she said.
Prior to its CVA being launched, Tofs saw its credit insurance pulled by Euler Hermes following news in April of planned stores closures.
According to Drapers, Tofs posted a 3.7 per cent drop in revenues for the year ending March 31 to £183.2 million.
Meanwhile, EBITDA came in at £6.2 million, a dramatic drop from the £12 million recorded in 2017.
Tofs’ admitted that it has been underperforming for some time, but this became “more marked” in the past year.
“Trading performance has deteriorated significantly during 2017 and early 2018 and this has led to liquidity pressures and breach of banking covenants,” the retailer said.
“The decline in performance has been the result of both the macro-economic factors and business-specific issues affecting the company.”