Weeks after Papyrus' filed for bankruptcy with plans to shut down all its stores, Paper Source is acquiring 30 of those stores in "key markets."
Paper Source said it will rebrand those stores "within three months," with some stores opening this month, and the rest opening in April, according to a company press release. The acquisition amounts to a 22% expansion of Paper Source's fleet, leaving the retailer with 165 stores.
The deal includes nine stores in New York state and nine in California, as well as various other locations, including Washington, D.C. and Boston, according to court documents. The new stores should create 300 jobs in stores and distribution centers, Paper Source said.
Papyrus closed many more stores in bankruptcy than the 30 Paper Source is acquiring. The stationery chain entered court with plans to shutter its total footprint of 254 stores, 178 of which are in the U.S.
The footprint Papyrus had may have been part of the problem, Craig Boucher, a senior managing director with Mackinac Partners and a restructuring officer for the retailer's parent SFP Franchise Corporation when it filed, said in court papers. He noted that the company took on debt to pursue a rapid expansion, which "led to a period of over-leverage" around the same time as the financial crisis. Papyrus' parent also acquired American Greetings' retail unit in 2009, which left the company with over 500 stores, and the costs associated with refurbishing and closing some of those locations.
Ultimately, the retailer was pursuing a sale and talking with landlords to gain concessions, but in December, American Greetings stopped shipping products, which had "an immediate negative impact," Boucher said.
With the acquisition, Paper Source's U.S. footprint will nearly be as large as that of Papyrus when it finally filed for bankruptcy. In a press release on the acquisition, Paper Source expressed confidence in its business, detailing that the company sells more than 10 million cards annually, and has posted double-digit growth in card and gift categories since 2015.
"Over 65% of the assortment is exclusive to Paper Source with their designs, exclusive colors and product innovations being central to the brand's success," the company said in the release.
To that end, Paper Source has worked to differentiate its assortment from competitors.
"We have created an experience that focuses on unique products and services you can't find anywhere else," CEO Winnie Park said in a statement.