Paperchase has started a Company Voluntary Agreement (CVA) process, with around 28 out of its 145 UK stores due to have their rent costs cut by 50 per cent for three months.

These stores will ultimately either close down or continue to operate for a rent-free period.

The stationery retailer consulted with its landlords regarding the store restructure in an attempt to cut costs through more affordable rents

The company promised to work closely with employees who will be affected by the store closures, but called the CVA “an equitable solution” and a “significant contributor” toward a sustainable future.

“We need to reshape our store estate in order to ensure a long-term, sustainable future for the business,” said chief executive Duncan Gibson.

Paperchase will aim to achieve creditors’ approval on the proposal at a meeting in due course.

Zoe Mills, UK retail analyst at GlobalData, commented: “Paperchase has been plagued by the growing presence of value retailers and general merchandisers in the market with the likes of B&M, Poundland and Flying Tiger Copenhagen all expanding their ranges and taking a more fun and design-led approach, while also undercutting on price.”

She argued that the retailer must do more than cull a small number of stores from its portfolio of 145 after a poor profit performance in 2018, which saw its earnings before tax fall 50.8 per cent to £4.5 million in during the last full year.

“The premium specialist must reduce the number of stock keeping units to allow focus on its stationery proposition and reconnect with its core customer, to generate loyalty among shoppers who are typically trading down.”

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