Tesco buys Paperchase brand but not shops, with 800 jobs at risk

Tesco has bought the brand and intellectual property of Paperchase, after the struggling stationery retailer collapsed into administration.

However, the deal does not include Tesco taking on the brand’s 106 stores across the UK and Ireland, leaving the future uncertain for Paperchase’s 820 employees.

The deal follows a difficult few months for Paperchase after rising costs and disappointing sales.

“Paperchase is a well-loved brand by so many, and we’re proud to bring it to Tesco stores across the UK,” said Jan Marchant, the managing director of home and clothing at Tesco.

Administrators from the insolvency firm Begbies Traynor have been appointed to handle Paperchase’s operations in the short term. They said the company’s stores would remain open and continue to trade as normal.

Paperchase will continue to honour gift cards but the joint administrators are urging customers to redeem them as soon as possible, and within the next two weeks.

The chain’s collapse into administration on Tuesday comes just months after a previous buyout.

A group led by Steve Curtis, the chair of the fashion chain Jigsaw, bought Paperchase in August.

Earlier in January, the greetings cards and gifts retailer said it required additional funding and had asked Begbies Traynor and PwC to advise it on strategic options, including the sale of the business.

However Begbies Traynor said no viable offers were received for the company on a going concern basis.

Paperchase was previously rescued from administration in January 2021 by Permira Debt Managers, one of its lenders.

In 2019, Paperchase’s then owner, Primary Capital, used an insolvency process known as a company voluntary arrangement (CVA) to cull unprofitable stores and cut rents.

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Tesco’s purchase of Paperchase on Tuesday came about through a pre-pack administration.

Britain’s biggest grocer said it came at a time when it was expanding its brand offering in its stores, and said it would share more details with customers shortly.

Paperchase was founded in 1968 by the art students Judith Cash and Eddie Pond, when they opened a store in Kensington in London. Since then it has changed hands numerous times, with WH Smith and the now defunct US books retailer Borders among previous owners. However, retail analysts said the emergence of Tesco as a buyer was unexpected.

The collapse of Paperchase was “not altogether a surprise”, said Stephen Springham, the head of retail research at the estate agents Knight Frank, “given its previous CVA history and its pass-the-parcel history of private equity ownership”.

The announcement of Tesco’s purchase of Paperchase came on the day the supermarket chain announced a jobs shake-up affecting 2,100 roles, after a decision to close its remaining meat, fish and hot deli counters in its larger stores. Many of those affected will have the option of moving to lower-paid roles.