Paperchase has secured a rescue deal which looks set to save 1,000 jobs across Britain, but up to 250 jobs are still at risk of being lost amid a raft of store closures.
Around thirty of the stationary retailer’s 127 shops will remain shut for good as part of the deal, as the chain battles falling sales and footfall during the pandemic.
The company, which fell into the hands of administrators at PwC three weeks ago, said 90 of its stores were being sold to new owner Aspen Phoenix Newco, which is a newly formed company backed by private equity group Permira Debt Managers.
Closing for good: Paperchase is keeping 37 out of its 127 UK shops closed for good
The locations of the stores closing and exact number of jobs at risk of being axed remains unclear.
The group said the rescue deal would enable Paperchase to retain its position in the UK retail landscape, ‘albeit in a smaller and more streamlined manner.’
Its new owners said that a ‘comprehensive transformation programme’ was underway to help it rebound once lockdown restrictions are lifted.
Olly Raeburn, chief executive of Paperchase, said the move will give the business the best chance of survival in a tough retail climate.
‘The cumulative impact of lockdowns and related restrictions means that it is imperative we make this tough but necessary decision to safeguard Paperchase’s future’, he said.
Mr Raeburn added: ‘In taking this action, we are giving ourselves the best opportunity to ensure that the business is fit for purpose in this new retail environment.
‘We have been in close dialogue with all of our stakeholders through this process and are grateful for their continued support.’
Paperchase has been sold in what is known as a pre-pack administration after seeing sales plummet during sporadic lockdowns.
This process enables a company to continue operating and help protect as many jobs as possible, without the need to push the firm into liquidation.
The lockdown in November proved a major headache for the company, which typically generates a large portion of its sales in the run up to Christmas.
Therese Coffey reacts to 12,000 job losses at Debenhams
Around 40 per cent of the retailer’s sales come from trade in November and December.
Paperchase has been owned by private equity group Primary Capital since 2010, but has been forced to contend with shifting consumer habits and competition for a number of years.
Back in 2019, the retailer launched a company voluntary arrangement which saw it linking rent payments to store turnovers.
Paperchase is the latest of a string of high-profile retailers to hit serious trouble in the past year, with pre-existing problems rapidly exacerbated in lockdown. Online rivals like Moonpig have also forced Paperchase to work harder to secure sales and shopper loyalty.
The likes of Debenhams, Arcadia, Warehouse and Oasis have all suffered and collapsed, with pressure on retailers deemed ‘non-essential’ mounting up.