Paperchase insurer abandons retailer’s suppliers

Paperchase is under renewed pressure after one of its main credit insurers withdrew its cover.

Following a a slump in profits, Euler Hermes has refused to cover new contracts with the retailer’s suppliers.

“We’re in discussion with [Euler Hermes] around why we believe this decision should be reversed. Paperchase has excellent long-term relationships with suppliers and very supportive lenders and owners. Trading so far this year is in line with expectations,” said Paperchase.

The group has been owned by the private equity firm Primary Capital for the past eight years and sells greetings cards, mugs and stationary.

The company was founded in 1968 by Judith Cash and Eddie Pond and currently employs an estimated 2,000 people.

Latest accounts have shown pre-tax profits to have fallen 88 percent to £613,000 in the year to the end of January 2017. Revenues were up by four percent to just over £119 million.

The high street faces a difficult time as retailers struggle amid weak consumer spending which has resulted in business failures, mass store closures and tens of thousands of job losses.

Retailers including Mothercare (LON: MTC)Carpetright (LON: CPR)Byron and Prezzo, have resorted to company voluntary arrangements (CVAs) whilst groups including Toys R Us and Maplin have fallen into administration.

In August, House of Fraser collapsed into administration and was purchased by Sports Direct’s (LON: SPD) Mike Ashley in a £90 million deal.

Chancellor, Philip Hammond, said: “We want to ensure that the high street remains resilient, and we also make sure that taxation is fair between business doing business the traditional way, and those doing business online.”

“We may have to look at temporary tax measures to rebalance the playing field until we can get international agreements sorted out.”