Paperchase stores under threat as retailer announces restructuring plans
PUBLISHED: 12:14 05 March 2019 | UPDATED: 15:50 05 March 2019
Paperchase branches in Ipswich, Bury St Edmunds, Colchester and Norwich could be under threat as the company reveals it is closing a “small number of stores”.
The stationery chain is the latest victim of the UK’s high street crisis and this week it has launched a company voluntary arrangement (CVA) process which, if agreed by its creditors at a meeting on March 22, would result in landlords agreeing a cut in rent and the chain walking away from some locations, with a small number closing.
The stationers employs 2,000 people across the UK and has stores in Ipswich, Norwich, Bury Saint Edmunds and Colchester.
However, the chain has admitted at this stage it has no further details on which stores could close.
The proposals, put together by its advisers KPMG, involve a 50% rent reduction on 28 sites for three months.
The chain said the proposals follow a period of “productive consultation” with its landlords regarding a restructuring of its store portfolio and “better alignment” of rents at certain stores proportionate to footfall and trading.
Asked if the East Anglian stores might be hit by closures, a spokeswoman for Paperchase said: “Unfortunately, we are not able to comment on the specifics at this point. It’s all entirely dependent on the landlords agreeing to the terms put forward by Paperchase to them.”
“The structural challenges facing the retail sector have been well documented, with the combination of declining footfall, increasing occupancy costs and other business costs all impacting profitability,” Paperchase said.
“While the majority of the 145 store estate will continue to trade as normal, Paperchase expects a small number of loss making stores will be closed as part of the process. Paperchase will work closely with employees affected by the closures to try and ensure their continued employment with the business.”
The chain said it had proposed an “innovative structure” whereby future rents would be linked to stores’ turnovers.
“The management feel this is an equitable solution, and an important contributor toward Paperchase’s long term sustainable future which is in the interests of all stakeholders,” it said.
The retailers says the restructure will play an important part in its long term strategy, ensuring it is geared for ‘the new retail environment’.
Chief executive Duncan Gibson said: “Paperchase is a much loved brand, with a loyal customer base, and a fantastic design-led product offer. However, we need to reshape our store estate in order to ensure a long-term, sustainable future for the business.
“We have decided to take decisive action now to ensure we’re able to succeed in the future. We believe this is in the best interests of the company, our people, creditors and our customers.”