River Island plans to close 33 of its 230 stores and a further 71 are at risk under a restructuring programme that could put more than 1,000 jobs on the line.
The family-owned company, which employs about 5,500 people, blamed a “migration of shoppers from the high street to online” and higher costs for the need to make the drastic changes to stem heavy losses.
The plan, which is being put together with help from the advisory firm PricewaterhouseCoopers and is to be voted on by creditors in August, involves the closure of 33 stores, with the future of a further 71 dependent on talks with landlords to improve rental deals.
Ben Lewis, the chief executive of River Island, said the company regretted any job losses and would “try to keep these to a minimum.”
He said, “River Island is a much-loved retailer, with a decades-long history on the British high street. However, the well-documented migration of shoppers from the high street to online has left the business with a large portfolio of stores that is no longer aligned to our customers’ needs. The sharp rise in the cost of doing business over the last few years has only added to the financial burden.”
River Island swung to a £33.2 million ($44.7 million) loss in 2023, according to the latest accounts filed at Companies House, after sales fell by more than 19 percent to £578.1 million. It made profits of £2 million in 2022.
In January, the group launched a cost-cutting effort including a redundancy programme at its London head office, affecting departments such as buying and merchandising.
River Island was formerly known as Chelsea Girl, and it began selling clothing under the name Lewis’s in the 1940s.
Its troubles have emerged as the budget chain Poundland launched a similar restructuring programme, with the eventual aim of shutting up to 150 stores, two distribution centres and ending online sales, putting 2,000 jobs at risk.
On Friday, the British luxury goods maker Mulberry announced plans to raise £20 million to fund a turnaround plan as it admitted it would make a loss of £23 million in the year to 29 March, a similar loss to the previous 12 months. Sales are expected to fall to £120 million, down from £153 million.
Retailers across the high street are coming under pressure from the rising cost of wages and taxes, including national insurance and business rates, while consumer spending remains weak amid concerns about geopolitical events and inflation on basics such as food and energy.
The rapid rise of cheap online sellers such as Shein, Temu and Amazon has also put high street retailers under pressure as visitor numbers to physical stores remain subdued.
Matthew Padian, an insolvency expert at the law firm Stevens & Bolton, said he expected more retailers would turn to restructuring plans to reduce their store estates as the new system, introduced during the pandemic, became better understood.
“There will be more coming down the track as it doesn’t look like it is getting any easier for retailers,” he said.
By Sarah Butler
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