The stationery retailer Paperchase has filed a notice to appoint administrators and could soon be the latest high street operator to head of business.
Registering an intention to appoint administrators will give the company’s directors the opportunity to seek a rescue deal that might save it from collapse.
However, any rescue will need to happen swiftly with significant financial pressures clearly bearing down on the business.
Like so many retailers across the UK, sales at Paperchase took a huge hit during 2020 and particularly during the periods of strict lockdown when all non-essential shops were forced to close.
The November lockdown is understood to have had a particularly damaging affect with Paperchase generally seeing an upturn in trade around that time and during the weeks running up to Christmas.
Indeed, as much as 40 per cent of the company’s annual revenues are accounted for by sales made during November and December.
“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,” noted a Paperchase spokesperson in an official statement.
“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,” they added.
“We are working hard to find that solution and this [notice of administration] is a necessary part of this work. This is not the situation we wanted to be in.”
Paperchase entered a Company Voluntary Arrangement (CVA), a form of insolvency, nearly two years ago with the aim of restructuring and establishing a more sustainable financial position.
However, recent years and particularly 2020 have been tough for the business, which has said its online sales have been strong recently but not enough to offset the impact of Covid lockdowns on its high street activities.
There are 127 Paperchase stores and 46 concessions, with the business employing roughly 1,500 people.
If no viable rescue options can be found for Paperchase in the coming days then PwC are expected to be appointed as its administrators in due course thereafter.