Stationery retailer Paperchase saw pre-tax profits plunge by 20% from £8.1 million to £6.5 million for the 12 months to 31 January.

This is despite an 8% rise in sales to £61.7 million after adding eight stand-alone stores to its existing 116, plus three further concessions in House of Fraser.

Gross profit margins fell 4% to 20% in the period.

Speculation has been mounting regarding the company’s 38 concessions at bookseller Borders UK after a management buyout of the latter backed by the investment arm of distressed-debt specialist Hilco last month.

Paperchase was put up for sale last year by its US owners, but the price tag of £50 million has so far not attracted a buyer.