Paperchase becomes latest victim of Covid-19 recession

11 January 2021 Consultancy.uk
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UK stationary firm Paperchase is reportedly on the brink of administration, after muted Christmas sales thanks to Covid-19 restrictions. The firm has filed notice to appoint PwC as administrator, placing 1,500 jobs at risk.

For 50 years, stationary retailer Paperchase has been one of the largest such chains in the UK. With 127 stores and 46 concessions across Britain – as well as 20 across Europe and Canada, and 20 franchises in the Middle East – the firm had been expanding as recently as 2020, when it opened its first standalone store in Dublin.

With that being said, Paperchase had been suffering financial difficulties for some time. Paperchase had undergone a so-called company voluntary arrangement (CVA) in March 2019 – before the Covid-19 crisis – in a bid to ease cost burdens on the business. Since the advent of the global pandemic, the situation has only worsened, as has been the case with many struggling firms throughout the last 12 months.

Paperchase becomes latest victim of Covid-19 recession

According to reports in the British press, the firm sank further into trouble as its recovery plan was later been thwarted by restrictions last year in the run-up to Christmas. The season usually accounts for 40% of annual revenue, but this year it did not provide such a boost, as shoppers were reluctant to venture out. As a result, Paperchase has filed a notice to appoint administrators from Big Four firm PwC.

A spokesman commented on the news, "The cumulative effects of lockdown 1.0, lockdown 2.0 - 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 Notice of Intent to appoint administrators is a necessary part of this work.”

The news of the notice being filed places some 1,500 jobs at risk. The announcement came only hours after Chancellor Rishi Sunak confirmed further financial aid for the sectors of the economy worst hit by the pandemic, including retail.