River Island faces potential collapse pending approval of its rescue plan in the High Court next week. The fashion retailer has proposed shutting down 33 stores and reducing rents in 71 other branches, pending consent from creditors and landlords. The Telegraph reported that without approval, River Island could run out of funds by the end of August, leading to potential insolvency proceedings.
To address a £10 million funding gap, River Island plans to access an emergency loan from its founders, the Lewis family, if the rescue plan is successful. The company aims to secure approval for its restructuring plan, which was sent to creditors on June 20th, as part of its proactive efforts to stabilize the business. Positive discussions with key stakeholders have boosted confidence in the plan’s approval in the coming weeks.
Under the restructuring plan, rent reductions ranging from 25% to 75% for 36 months are proposed for 38 stores, while 24 stores may see rent reduced to zero. Nine stores are slated to continue paying full rent, while 97 stores will remain unaffected. With approximately 230 stores and 5,500 employees, River Island incurred a £33.2 million loss in 2023 due to a 19% sales decline and has enlisted PwC advisors to oversee the restructuring.
River Island’s CEO, Ben Lewis, acknowledged the challenges faced by the business due to shifting consumer behaviors and increased operational costs. He emphasized the importance of restructuring to align with customer needs and ensure long-term profitability. Lewis expressed regret over potential job losses from store closures and emphasized the company’s commitment to minimizing such impacts.
The proposed store closures, contingent on plan approval, aim to streamline operations and secure River Island’s future as a successful retail enterprise. Stay informed with the latest money news and exclusive deals by joining the Money WhatsApp group or subscribing to the Mirror’s Money newsletter for valuable insights and shopping offers directly to your inbox.