Paperchase is on the brink of administration after Covid-19 restrictions placed ‘unbearable strain’ on the card and gift retailer’s Christmas sales.
The stationery chain, which usually makes 40 per cent of its annual sales over November and December, was particularly hit by lockdown measures over the festive period.
Approximately 1,500 jobs and 173 stores are on the line for the retailer, who appointed accountancy firm PwC to handle the administration process, The Telegraph reports.
A spokesperson on behalf of Paperchase 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.
The stationery chain, which usually makes 40 per cent of its annual sales over November and December, was particularly hit by lockdown measures over the festive period
‘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.’
The news followed yesterday’s announcement that England has entered a third national lockdown, seeing all non-essential retailers close countrywide.
Coronavirus lockdown rules hammered the UK High Street in November as retail sales dropped by 3.8 per cent when compared to October.
In England, non-essential shops were subject to restrictions from November 5 to December 2, in parts of Scotland from November 20 to December 11 and in Wales from October 23 to November 9.
The news followed yesterday’s announcement that England has entered a third national lockdown, seeing all non-essential retailers close countrywide
Despite the UK seeing an online shopping surge of 74.7 per cent year-on-year over Christmas, the company said it was ‘not immune’ to the struggles of the high street despite ‘strong online trading’.
The company now has ten days in which it can attempt to restructure the business to save jobs and avoid liquidation whilst protected from its creditors.
Paperchase has been experiencing losses for some years, which grew from £6.3million to £10million in the year to February 2019, with turnover falling five per cent to £125m, The Telegraph reports.
In March the company struggled to cut costs by entering a company voluntary arrangement which saw landlords reduce rents at 100 stores, 28 of which saw a 50 per cent reduction for three months after which some were closed.
The chain was bought from American bookseller Borders in 2010 in a £20m management buyout backed by Private equity Primary Capital. It was put on the market in 2015 but failed to receive any suitable offers, reports The Telegraph.