Tesco acquire the name and intellectual property of High Street stationery business Paperchase, yet the grocer will not buy the chain's 106 stores in the UK and Ireland, casting doubt on the future of 820 employees.
Tesco’s business purchase was prompted by a few financially challenging months for Paperchase, which included increased expenses and weak sales, according to The Guardian.
Begbies Traynor was appointed as the short-term management of Paperchase's business. They declared that the company's stores will conduct regular business until the store is set to close. Meanwhile, Paperchase will continue to honour its clients and encourage them to use their gift cards as soon as possible.
Jan Marchant, a managing director at Tesco, said that she was proud to bring Paperchase to Tesco stores across the UK. As a brand beloved by so many, it will enable them to implement the initiatives they have been developing to add more brands to the present choices offered.
Paperchase was previously purchased by Steve Curtis the chair of Jigsaw, a luxury clothing brand in August 2022 before Tesco acquired it. However, four months later, the stationary firm was back on the market.
In January, the retailer of greeting cards and gifts requested advice on strategic options from Begbies Traynor and PwC because of their need for extra financing.
Begbies Traynor responded saying that no reasonable proposals had been made for the company as a going concern. In 2019, Primary Capital, one of Paperchase's former owners, reduced rents and closed unprofitable locations through an insolvency procedure called a company voluntary arrangement to minimise costs.
However, the saving efforts were futile when one of its lenders, Permira Debt Managers, saved Paperchase from bankruptcy in January 2021.
When Paperchase announced that the company was up for sale, many buyers showed interest. Ultimately, Tesco was the one who ended up buying the company on January 31, 2022, but it was only made possible through a pre-pack administration.
Tesco intends to save costs by cutting employment. A total of 2,000 positions would be eliminated across the company as part of new adjustments to the stores.
1,750 team manager positions at Paperchase larger shops will be replaced with a new tier of shift leader positions to manage its shop floor operations.
While these new positions will pay less, team managers who accept them will have their compensation guaranteed for two years.
Tesco will close eight pharmacies, eliminating 350 more jobs. They will convert midnight shifts to daytime shifts, reduce hours at several post offices and eliminate back-office staff.
Additionally, the grocery store will close all of its hot delis and remaining counters due to a lack of business. Employees in these hot food locations will be given other opportunities.
Given its prior history of CVAs and its pass-the-parcel history of private equity ownership, according to Stephen Springham, head of retail research at the estate brokers Knight Frank, the collapse of Paperchase was "not entirely a surprise."
Following a decision to remove its remaining meat, fish and hot deli counters, Tesco revealed a job shake-up affecting 2,100 roles on the same day it announced its purchase of Paperchase. Many of those impacted will have the choice of switching to roles with less pay.
Paperchase was founded in 1968 by two art students, Judith Cash and Eddie Pond. They opened their first shop in Kensington, London. Since then, it has gone through many owners, including WH Smith and the now-defunct US bookseller Borders.
Retail observers, however, remarked that Tesco's appearance as a buyer was unexpected. Hopefully, Paperchase will be able to find a permanent home at Tesco.
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