Wed, 06 Jan 2021 | ADMINISTRATION
Cards and stationary retailer Paperchase has filed notice of intent to appoint administrators, saying that COVID-19 restrictions had put “an unbearable strain on the business”. The company, which is owned by private equity firm Primary Capital and has 173 UK stores and concessions, has lined up accountancy firm PwC to handle the administration.
Paperchase is not classed as an essential retailer, so was forced to close all stores during the spring lockdown, the second lockdown in November and December and in areas that were later put into tier 4.
With the business typically generating 40 per cent of its annual sales in November and December, the second lockdown was particularly damaging. The latest lockdown means its stores have once again been forced to close.
The company underwent a CVA in March 2019 and said that many stores had continued to trade profitably and that online sales had performed strongly, but these factors were not enough to offset the cumulative impact of COVID-19.
Other possible contributors to the retailer’s distressed position include the rise of online card retailers such as Moonpig and Funky Pigeon and its strong presence in travel hubs, such as railway stations, which have seen drastically reduced footfall during the pandemic.
A company 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.”
In its most recent financial report, for the year ended February 2 2019, the company reported turnover of £125 million, down from £131 million a year earlier, gross profit of £14 million and a £3.4 million loss for the financial year.
Its fixed assets at the time were valued at £14.4 million, current assets at £16.4 million and net assets at £2.8 million.
The news of Paperchase’s imminent administration came hours after Chancellor Rishi Sunak announced a £4.6 billion package of financial assistance to support UK businesses through the third lockdown.
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