As the industry digests the news that Paperchase is going for a CVA (Company Voluntary Arrangement), read more here, Timothy Melgund, its deputy chairman of gives assurance that greeting card publishers supplying the retailer will be paid to the agreed terms. He also confirmed to PG Buzz that all suppliers’ outstanding invoices have now been settled.
Timothy accepts that going for a CVA is “Quite a step” given but highlights that importantly it “has the full financial backing of our major investor and one that provides a clear path through the current imbalance between prevailing retail occupation costs and current market performance.”
When pressed for clarification as to how many Paperchase shops are likely to close as a result of the CVA, Timothy says the process means that there is no definitive answer as yet.
“We will definitely close five, but the way CVAs are structured now gives landlords the opportunity, in most cases, to resume control of any particular store should both parties not be able to agree acceptable terms to move forward,” explains Timothy.
Elaborating on the rudiments of a CVA, Timothy adds that it “protects all creditors of the business apart from property landlords who are required by the action to comply with the terms set out and approved by the courts.”
Much to the relief of the many card publishers who supply Paperchase, both under their brand or bespoke products, their invoices are being settled.
“Now we have the CVA in place we will continue to pay suppliers to terms (everyone was brought up to date yesterday!) and will continue to push forward with the Paperchase brand with renewed vigour and purpose,” Timothy assured PG Buzz.
He said both Paperchase’s international businesses and its relationship with Next in the UK will also “continue to develop and grow”.
Views on the news
PG Buzz canvassed the views from those in the industry on Paperchase’s CVA proposal.
* Karen Hubbard, ceo of Card Factory:
“Last year was very tough for many retailers right across the board and retailers are cutting their cloths accordingly.
Paperchase has a strong heritage design-led brand, much loved in the UK and I am sure the changes that the well-respected management team is making will ensure it has a strong financial future as well as being one that the UK card loving public continue to shop.
Paperchase has a relatively small market share in UK card retailing – it’s a tough but resilient market and I wouldn’t use this announcement as anything of concern for the overall card market – it sounds to me like Paperchase has some issues with rent that they need to resolve with their landlords and they have a plan to do that.
Our sector will remain strong – we need to ensure that the card buying public are offered a wide range of choice and it is affordable for them to share the sentiment in their own way – with a fabulous card!”
* Paul Taylor, managing director of Cardzone:
“I personally feel it is the best outcome and I hope the management team can turn it around!”
* Daniel Prince, managing director of Danilo:
“As a publisher it’s great news for the industry as I am aware of a lot of concern for a number of publishers over the past few months. The fact that landlords have listened to Paperchase and agreed to this new deal, shows how vital Paperchase it is to the retail sector and the greeting card market.
Retail is changing, and years of rising rates and rents, which have not been sustainable for retailers, appears to be ending. Long term it can only be good for the retail market and other retailers in our sector.
Other retailers have also had CVAs in past year or so, and while landlords may not be so happy to agree to CVAs I suspect it’s a much better alternative than empty retail units.
The biggest issue for retailers is footfall, and with the ease of online transactions, less people are out there visiting shopping malls and high streets. To change we need to make the high street more accessible.
I think the lessons from this are really that retailers will need to negotiate better rent deals with landlords, try to grow online more, and maybe widen their product range to make up for the declining footfall. Discounting isn’t the answer.”
Top: Five Paperchase stores will definitely close, but there are likely to be more.