River Island faces a potential collapse unless its rescue plan gains approval in the High Court next week. The fashion retailer has proposed shutting down 33 stores and lowering rents in 71 other branches, pending agreement from creditors and landlords.
The Telegraph reports that River Island’s formal restructuring plan warns of a financial crisis by the end of August, potentially leading to insolvency if the measures are not sanctioned. To bridge a £10 million funding gap, the company aims to secure an emergency loan from its founders, the Lewis family.
In response, a spokesperson for River Island emphasized the proactive nature of the Restructuring Plan, stressing ongoing discussions with key stakeholders to secure plan approval in the coming weeks. The proposed strategy includes rent reductions ranging from 25% to 75% for 36 stores over 36 months, zero rent for 24 stores, and full rent for nine stores.
Notably, approximately 97 stores out of the UK’s 230 River Island outlets remain unaffected by the restructuring plan. The retailer, employing about 5,500 individuals, experienced a £33.2 million loss in 2023 due to a 19% sales decline and has enlisted PwC advisors for restructuring guidance.
Highlighting the shift in consumer behavior towards online shopping, River Island’s CEO, Ben Lewis, acknowledged the need to realign the store portfolio with evolving customer preferences. Lewis expressed confidence in the business transformation strategy to ensure long-term sustainability, emphasizing the positive impact of recent fashion and in-store enhancements.
While regretting potential job losses from store closures, River Island aims to minimize the impact if the rescue plan is approved. The affected stores are expected to cease operations by January 2026, pending court approval.