Paperchase, a stationery chain selling greeting cards, stationery and accessories, revealed in accounts filed at Company House that it made a statutory pre-tax loss of £6.3 million as opposed to its profit of £613,000 in 2017.
Earnings fell from £9 million to £4.5 million on sales up by 5.6 percent to £131.2 million in the year to 3rd February, 2018.
Although fewer people are visiting the retailer, the loss has been attributed to the restructuring of some of its shops and the cost involved.
In September, the company’s credit insurance cover was reduced.
Euler Hermes refused to cover new contracts with Paperchase’s suppliers, although the retailer’s agreements with Euler were not affected.
Insurers refuse to cover contracts when they suspect that a company will go out of business.
Paperchase is owned by the private equity firm Primary Capital. They bought the retailer in 2010 for £20 million from the bookseller Borders UK, which collapsed into bankruptcy.
Primary Capital employed rapid growth afterwards by opening 75 stores in the UK, adding to the company’s 65 standalone stores and 35 concessions.
It tried to sell Paperchase in 2014 and considered a stock market flotation in 2016.
Other stores in Drake Circus Mall are also experiencing the profit-fall storm. Footasylum, McColl, M&S, H&M, and Topshop are victims.
Others like Smiggle and Joules, Hotel Chocolat, Superdry, JD Sports, Primark, Lush and Waterstones are doing well.
Duncan Gibson, the new Chief Executive since February 2018, said Paperchase has to stabilise earnings before trying to grow again.