River Island drafts rescue plan as losses mount
River Island has brought in restructuring experts from PwC as the high street fashion chain battles tough trading conditions and falling sales
River Island has brought in restructuring experts from PwC as the high street fashion chain battles tough trading conditions and falling sales.
The fashion retailer, which operates around 230 stores and employs 5,500 people, is working on a formal restructuring plan that could result in store closures and job cuts.
The move follows cost-cutting efforts launched January, when the business launched a redundancy programme at its London head office, affecting departments such as buying, merchandising, and HR.
At the time, the business had enlisted AlixPartners to help improve profitability – a role now understood to have been superseded by PwC.
Sources told Sky News this weekend that the family-owned retailer is in the process of finalising restructuring proposals. While no formal decisions have been made, a court-supervised deal could emerge in the coming weeks.
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Accounts for the year ending 30 December 2023 revealed a pre-tax loss of £33.2m, with turnover down more than 19% to £578.1m – figures that mark a further deterioration from the £32.2m loss reported in October.
At the time, the retailer blamed a 15% drop in sales and ongoing investment in its concept store rollout.
In its latest annual report, River Island Holdings Limited warned: “The market for retailing of fashion clothing is fast changing with customer preferences for more diverse, convenient and speedier shopping journeys and with increasing competition especially in the digital space.”
“The key business risks for the group are the pressures of a highly competitive and changing retail environment combined with increased economic uncertainty.
“A number of geopolitical events have resulted in continuing supply chain disruption as well as energy, labour and food price increases, driving inflation and interest rates higher and resulting in weaker disposable income and lower consumer confidence.”
Should the restructuring plan proceed, it would allow River Island to reach agreements with creditors such as landlords in order to avoid insolvency proceedings. The mechanism has recently been used by other retailers including Hobbycraft.
The development comes amid wider turbulence across the retail sector, with chains such as Lakeland and The Original Factory Shop seeking new owners, and Poundland nearing the end of an auction process.
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