Yahoo Finance Paperchase on the brink of administration
Stationery chain Paperchase is on the brink of administration with 1,500 jobs at stake after the pandemic hammered high street retailers over Christmas.
The company behind 173 stores and concessions has filed a notice to appoint administrators as it scrambles to secure its future. Accountancy giant PwC is being lined up to handle the process.
The cards and gifts retailer earns 40pc of its sales in November and December, but lockdown measures forced it to shut scores of shops over the festive period.
Overall retail sales fell 3.8pc in November, according to the Office for National Statistics, while separate data from ShopperTrak showed high street footfall dropped 40pc on the last Saturday before Christmas.
A spokesman for Paperchase said measures to contain the virus ahead of Christmas had put “unbearable strain on retail businesses across the country”.
The business added: “Paperchase is not immune despite our strong online trading.
“Out of lockdown we’ve traded well, but as the country faces further restrictions for some months to come, we have to find a sustainable future for Paperchase.
“We are working hard to find that solution and this notice of intention is a necessary part of this work. This is not the situation we wanted to be in. Our team has been fantastic throughout this year and we cannot thank them enough for their support.”
Filing the notice is a legal measure which will protect Paperchase from its creditors for 10 days.
Companies can take such steps in order to restructure the business to prevent a collapse into liquidation.
Problems pile up
Paperchase agreed a company voluntary arrangement with landlords in March, a rescue deal designed to ease costs and debts.
The retailer cut rents at 100 stores, including halving costs at 28 sites for three months.
A further 70 stores had their rent tied to turnover, while some stores closed down.
It follows a stream of collapses in the retail sector in 2020 as the pandemic wrecked swathes of the industry.
Private equity Primary Capital backed a £20m management buyout of Paperchase in 2010 from failed American bookseller Borders.
It attempted to sell the stationery chain five years later, but the process was shelved because offers were too low.
Paperchase apologised for a promotional giveaway in the Daily Mail in November 2017 following pressure from the Stop Funding Hate campaign, which urges advertises to cut their ties with newspapers deemed to promote divisive views.
The retailer's losses widened from £6.3m to £10.3m for the year to February 2019, according to its latest accounts. Turnover fell 5pc to £125m.
