Tesco acquired Paperchase out of administration in a deal that puts the future of 106 stores and 820 jobs at the gift and stationery retailer at risk.
After trying to find viable offers for the business failed, administrators from Begbies Traynor were appointed to Paperchase. They said yesterday evening that 75 employees in the retailer's head office in London had been made redundant.
With all stores remaining open as normal, Begbies Traynor said Paperchase would continue trading in the short term.
Jan Marchant, the managing director of home and clothing at Tesco, said yesterday: Paperchase is a well-loved brand and we are proud to bring it to Tesco stores across the UK. She said Tesco had been working on plans to bring in more third-party brands.
Paperchase was founded by two art students and opened its first store in Kensington, West London in 1968. In 2020 a company voluntary arrangement was launched to cut stores and reduce costs before putting the business through a pre-pack administration in January 2021, after sales were hit by the government's pre-Christmas lock-down. The deal with Tesco is a pre-pack arrangement.
The company was sold to Permira Debt Managers, its secured creditor, in a fast-track insolvency process that saved most of its stores, but landlords were forced to renegotiate lease terms as part of the arrangement. The deal has resulted in the loss of more than 500 jobs.
In August of last year, the retailer was bought by a consortium led by Steve Curtis, chairman of fashion retailer Jigsaw. Curtis, who works with the investment group Rcapital and Quilam Capital, has worked with retailers such as Tie Rack.
According to Stephen Springham, head of retail research at Knight Frank, the latest collapse of Paperchase was not a surprise, given its company voluntary arrangement history and the pass-the- parcel history of private equity ownership. Springham added that there should be considerable interest because it is a strong, differentiated brand in a retail sector that enjoys high gross margins and fast stock-turn.