River Island faces potential collapse unless its High Court-approved rescue plan is greenlit next week. The retailer aims to shut down 33 stores and slash rents for 71 more locations, pending creditor and landlord approval.
According to The Telegraph, River Island’s restructuring proposal warns of imminent financial depletion by August’s end, leading to potential insolvency without the plan’s endorsement. The company’s survival hinges on gaining the necessary support.
If the rescue plan progresses, River Island can secure an emergency loan from the Lewis family, its billionaire founders, to cover a £10 million funding shortfall. The retailer currently grapples with financial challenges.
A River Island representative emphasized the proactive nature of the restructuring plan, which complements the ongoing Transformation Strategy, ensuring the company’s sustainability. Positive discussions with key stakeholders indicate confidence in the plan’s future approval.
The proposed restructuring entails rent reductions ranging from 25% to 75% over 36 months at 38 stores, with 24 stores facing rent elimination, and full rent maintained for nine properties. Approximately 97 unaffected stores will operate as usual, paying full rent.
With a network of about 230 stores and 5,500 employees, River Island’s recent financial struggles, witnessing a £33.2 million loss in 2023 due to a 19% sales decline, prompted the engagement of PwC advisors for the restructuring process.
Ben Lewis, River Island’s CEO, acknowledged the retailer’s legacy but recognized the need for strategic adaptation to align with evolving consumer preferences and economic challenges. The restructuring plan aims to ensure long-term profitability and sustainability.
To mitigate job losses, River Island plans to minimize store closures, with the rescue plan targeting specific store closures by January 2026 pending approval. The company remains committed to adapting and securing its future in the retail landscape.