Watch: Paperchase on brink of collapse into administration
Stationery chain Paperchase, which employs around 1,500 people, is on the verge of administration as high street retailers deal with the economic fallout of the coronavirus pandemic and ensuing lockdowns, which hit them particularly hard over the holiday period.
Mike Woodcock, the company’s chief financial officer, filed court papers on Tuesday indicating plans to appoint administrators to Paperchase Products Limited, its main operating business.
Accountancy firm PwC has been pulled in to handle the process. Filing the notice is a legal measure which will protect Paperchase from its creditors for 10 days.
A Paperchase spokesperson told Yahoo Finance all of its 127 stores across the country, and 46 concession stalls, were closed for five months last year due to lockdowns, which put an “unbearable strain” on the company.
They said 40% of the company’s sales are usually made in November and December, and the second national lockdown in November, followed by Tier 4 restrictions in London, had a “significant impact” on sales.
They added that filing the notice to appoint an administrator is to provide the company with “breathing space” so it is able to quantify “taking its stock of exactly where it is.”
The company also said it wanted to emphasise that “this is by no means the end” for Paperchase, and rather a “necessary action” needed amid the fallout of the lockdown.
Paperchase’s online sales contributed to about 5% of its revenue last year, and this was up to 15% in 2020, but was “by no means” enough to counteract the hit the company took from the lockdowns, the company said.
Its most recent set of public accounts show it lost £7.7m ($10.5m) on sales of £129m.
PwC told Yahoo Finance it is not commenting on the topic.
Paperchase is an iconic British brand, which opened its first store in Kensington back in 1968. Internationally, it has more than 20 concessions across Europe and Canada and 20 franchises in the UAE and Qatar.
Retailers have taken a major hit during the pandemic. UK retail sales went into reverse in November for the first time in six months, as lockdown restrictions forced the closure of many stores.
The COVID-19 pandemic led to the collapse of high street chains including Arcadia, Debenhams and Bon Marche last year. The Centre for Retail Research estimates 175,000 retail jobs were lost last year.
“The first half of 2021 looks much like 2020, only worse,” the Centre for Retail Research said. “We expect there to be 200,000 job losses in the sector and a lot more bad news about corporate failures.”
Watch: The UK high street names lost in 2020