Paperchase today filed a notice of intention to appoint administrators, hours after the UK’s third lockdown came into force. The move puts in question the future of 173 Paperchase stores – and the jobs of about 1,500 staff – but is intended to give the business time to work out how it can survive long-term.
The stationery, cards and gifts retailer, ranked Top100 in RXUK Top500 research, today said that the strain of the third lockdown – which meant the retailer had to close as a non-essential retailer – was testing the business to its limits despite fast ecommerce growth in recent months.
A Paperchase spokesperson said: “The cumulative effects of lockdown one, lockdown two – at the start of the Christmas shopping period – and now the current restrictions have put unbearable strain on retail businesses across the country.
“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 NOI 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.”
Paperchase emerged cautiously optimistic from the first 12-week lockdown that started last March and ran until mid-June. While the retailer has traded profitably in many of its stores and strongly online, some 40% of its annual sales come in November and December. Second lockdowns in England and Wales during November were followed by Tier 4 restrictions in London and the South East, and parts of Scotland for the rest of December.
The retailer says it now aims to find a solution that will secure its long-term future, and that filing plan to appoint PwC as administrators will give it the space and time it needs to work out what the right shape is going to be.
The move follows a CVA (company voluntary arrangement) in March 2019 that had already linked Paperchase rents to turnover.