The closing of shops by the card and stationery chain before Christmas puts 1,500 workers at risk.
Since shutting stores in the run-up to Christmas, card and stationery retailer Paperchase is on the verge of insolvency, causing a “intolerable burden” on retailers and putting 1,500 jobs at risk.
A petition to appoint a receiver to begin a rescue operation has been filed by the company, which operates 173 stores and concessions. 10 days of protection from creditors are given in the legal contract.
In the run-up to Christmas, Paperchase was especially vulnerable to sales losses caused by closures, as 40 percent of the annual sales of the chain are generated in November and December. The new limitations mean that all shops in the U.K. Much like other non-essential retail stores, they are closed again.
A spokesperson for Paperchase said the combined impact of the numerous closures, including the loss in November of the all-important Christmas trading season, was a “unbearable burden on retail businesses across the country.”
Paperchase is not resistant to the difficult situation, despite good online sales, he said. “Outside of the lockdown, we’ve done well, but as the country faces more restrictions in the coming months, we need to find a sustainable future for Paperchase.”
The spokesperson added that the organization is “working hard to find that solution,” a “necessary part of that work.” with the administrative notice. The accounting firm PwC has been hired to manage the operation.
“This is not the situation we wanted to be in,” said the spokesperson for Paperchase. “Our team has been fantastic all year and we can’t thank them enough for their support.”
The company was founded in 1968 by Judith Cash and Eddie Pond, art students who opened a store in the Kensington neighborhood of London. Several times, the business changed hands, with competitor WH Smith and now-defunct U.S. book giant Borders among the former owners of the chain.
A £ 20 million management buyout of Borders was backed by private equity company Primary Capital in 2010. Primary Resources, also owned by Yo Sushi and Coffee Country, attempted to sell Paperchase in 2014 and, two years later, considered an IPO.
A bankruptcy mechanism known as a Company Voluntary Agreement (CVA) was used by Paperchase in 2019 to remove unprofitable stores and cut rents.
The company blamed a drop in customers combined with rising costs on its financial difficulties. Some of its stores have been switched to sales-based leases by the CVA, ensuring the business is not as burdened with real estate costs as other supermarket chains.
The new financial statements show the retailer made a loss of £ 11 million in the year to February 2019 on revenue of £ 125 million.