Paperchase faces uncertain future as owners consider sale | Retail industry

Struggling stationery retailer Paperchase is facing an uncertain future, with the owners considering a sale or potential administration less than six months after a previous buyout.

The retailer, which faces rising costs and lacklustre sales and requires additional funding, has beenput up for auction under the advisory firm PricewaterhouseCoopers (PwC), as first reported by Sky News.

Bidders are likely to include the restructuring firm Hilco, which attempted to buy the stationery retailer last summer.

Sources said administrators from the advisory firm Begbies Traynor have been lined up for a potential pre-pack rescue deal, which is likely to involve some store closures.

A spokesperson for Paperchase said: “We confirm that we have retained Begbies Traynor and PwC to advise Paperchase on strategic options, including the sale of the business as a going concern to new owners. Talks are continuing with a number of interested parties.

“All Paperchase stores and the website will continue to trade as normal during this period.”

Paperchase was bought by a group led by Steve Curtis, the chair of the fashion chain Jigsaw, in August last year. It was previously rescued from administration in January 2021 by Permira Debt Managers, one of its lenders.

It employs 820 staff and has about 100 outlets, down from more than 150 when it previously called in administrators.

Curtis, a turnaround expert who works with the investment group Rcapital and Quilam Capital, has previously worked with retailers including Tie Rack and Feather & Black.

Paperchase was founded in 1968 by the art students Judith Cash and Eddie Pond, who opened a store in London’s Kensington. Since then it has changed hands numerous times, with WH Smith and the now defunct US books retailer Borders among the chain’s previous owners.

In 2019 Paperchase’s then owner Primary Capital used an insolvency process known as a company voluntary arrangement (CVA) to cull unprofitable stores and cut rents.

Retailers have been hard hit by a surge in energy and labour costs as shoppers have reined in spending on non-essentials as spare cash has been limited by rising household bills.

While spending held up better than expected over Christmas, the number of shoppers on high streets is still well below pre-pandemic levels, affecting impulse purchases at stores such as Paperchase, while the sending of cards has been affected by postal strikes.