River Island Avoids Bankruptcy with Approved Reorganization Strategy

River Island gets the all-clear on its rescue plan. The British fashion company has received approval from the High Court to implement its restructuring plan, Drapers has reported. This plan involves the closure of thirty-three stores in January next year and a reduction in rents at 71 stores.

The chain will receive, in parallel, 40 million pounds ($53.7 million) in additional funding through Blue Coast Capital, the investment vehicle of the founding Lewis family. This injection, together with the cuts, will prevent the retailer from running out of cash, as it announced in June it would do if it did not get the green light for its plan.

River Island’s lawyer told the court that the brand has faced supply chain disruptions, rising energy prices, wage inflation and lower customer footfall due to the transition to online shopping. All of this meant it was unable to arrest its decline and had a “cost base that was too high and unsustainable at its current level.“

River Island posted a $44.6 million loss in 2023

The group currently operates through 250 stores and employs approximately 5,500 people between its headquarters and stores, of which 122 are expected to be unaffected by the restructuring plan. “We have a clear transformation strategy in place to ensure the long-term viability of the business, and this decision provides us with a solid foundation to deliver it,“ celebrated Ben Lewis, the company’s chief executive officer.

River Island posted losses of 33.2 million pounds ($44.6 million) in 2023, according to its latest accounts filed, following a drop in sales of more than 19% to 578.1 million pounds ($777.2 million). In 2022, it made a profit of 2 million pounds ($2.6 million).

Had the plan not been approved, in fact, the company already announced that it would be unable to continue operating normally, and would face insolvency proceedings. “The recent improvements in our offer and shopping experience are beginning to bear fruit, and the restructuring plan will now allow us to adapt the store network to the real needs of our customers - added the director - and we thank our suppliers, landlords and other stakeholders for their commitment and their confidence in the future of River Island”.