The owners of River Island have drafted in restructuring consultants to draw up a cost-cutting plan that could result in job losses at the fashion retailer.
The accounting firm PwC has been hired to work on a turnaround for River Island, which employs 5,500 people across 230 stores. It is privately owned by the Lewis family, descendants of the company’s founder Bernard Lewis, who set up Lewis Separates and Chelsea Girl, as River Island was then known, in 1948. He later expanded into menswear under the Concept Man brand.
Like many high street retailers, River Island has been hit by turbulent trading. The company’s most recent filings at Companies House show that it made a pre-tax loss of £33.2 million in the year to the end of December 2023. Its turnover slumped by nearly 20 per cent to £578.1 million. Its accounts also warned of a number of risks to its business model, such as supply-chain issues and competition from digital retailers.
River Island brought in AlixPartners, PwC’s restructuring competitor, earlier this year to draw up a similar plan. Sky News first reported PwC’s involvement.
Rachel Reeves’s maiden budget hammered large employers such as retailers with a hike in national insurance contributions (NICs) and a rise in the minimum wage. Tesco, for example, is expected to pay an extra £1 billion in NICs to the Treasury over the course of this parliament because of the changes.
High street retailers have also been facing increased online competition from the likes of the Singapore-based Shein.
As a result, turnaround investors, which specialise in buying up troubled businesses, have been circling high street brands. Both Lakeland and The Original Factory Shop have kicked off sales processes to find new backers.
Poundland was also put up for sale by its Poland-based owner earlier this year. The turnaround investor Gordon Brothers is understood to be the frontrunner to buy the company, which is expected to be sold for the nominal price of £1. Any deal is likely to result in store closures and job losses.
WH Smith’s high street arm, meanwhile, will soon be taken over by Modella Capital and its stores renamed TG Jones.
In essence, a restructuring process is an agreement between a company and its creditors to undertake cost-cutting measures so that it can continue to trade as a going concern, and avoid bankruptcy.
Sky News reported that a restructuring plan will be finalised in the coming weeks.
River Island did not respond to a request for comment.
