Paperchase sale discussed at crunch meeting

Retail Week understands that the possibility of Paperchase being sold was explored at a meeting between the business’ senior management and key landlords in London yesterday. A number of restructuring options were reportedly discussed, including the possibility of the retailer being sold in a pre-pack administration.

Retail Week also understands the chain has drafted in KPMG to advise on possibly launching a company voluntary arrangement. The CVA would allow the retailer to streamline its portfolio of stores. 

Both KPMG and Paperchase have declined to comment. 

In a letter seen by Retail Week on Tuesday, Paperchase’s chair Nick Wood said the business required a “significant restructure” if it was to survive. He also said it is “heavily dependent” on Christmas trade, and sales during the festive period had been “disappointing” for “the third year in a row”.

Wood blamed “declining footfall” to stores as the main reason behind the ongoing decline and said restructuring would focus on UK stores in particular.

The business currently has around 130 UK stores and 30 in Europe and the Middle East, employing 2,000 staff. It also operates some concessions within Next stores.

In its last full-year figures, covering the 53 weeks to February 3, 2018, Paperchase suffered a 50% slump in EBITDA to £4.5m, despite a 5.6% uptick in total sales to £141.2m.

Paperchase is understood to have already discussed its position with the British Property Federation and retail property body Revo ahead of the meetings.

If the business does get sold, it would be the first time it has changed hands since 2010 when it was acquired by Primary Capital.