River Island plans to shut 33 of its 230 shops and an extra 71 are in danger below a restructuring programme that would put greater than 1,000 jobs on the road.
The family-owned firm, which employs about 5,500 individuals, blamed a “migration of consumers from the excessive road to on-line” and better prices for the necessity to make the drastic adjustments to stem heavy losses.
The plan, which is being put along with assist from the advisory agency PricewaterhouseCoopers and is to be voted on by collectors in August, entails the closure of 33 shops, with the way forward for an extra 71 depending on talks with landlords to enhance rental offers.
Ben Lewis, the chief govt of River Island, stated the corporate regretted any job losses and would “attempt to maintain these to a minimal.”
He stated, “River Island is a much-loved retailer, with a decades-long historical past on the British excessive road. Nonetheless, the well-documented migration of consumers from the excessive road to on-line has left the enterprise with a big portfolio of shops that’s not aligned to our prospects’ wants. The sharp rise in the price of doing enterprise over the previous couple of years has solely added to the monetary burden.”
River Island swung to a £33.2 million ($44.7 million) loss in 2023, in keeping with the newest accounts filed at Corporations Home, after gross sales fell by greater than 19 % to £578.1 million. It made earnings of £2 million in 2022.
In January, the group launched a cost-cutting effort together with a redundancy programme at its London head workplace, affecting departments resembling shopping for and merchandising.
River Island was previously referred to as Chelsea Woman, and it started promoting clothes below the title Lewis’s within the Forties.
Its troubles have emerged because the funds chain Poundland launched an analogous restructuring programme, with the eventual purpose of shutting as much as 150 shops, two distribution centres and ending on-line gross sales, placing 2,000 jobs in danger.
On Friday, the British luxurious items maker Mulberry introduced plans to lift £20 million to fund a turnaround plan because it admitted it will make a lack of £23 million within the 12 months to 29 March, an analogous loss to the earlier 12 months. Gross sales are anticipated to fall to £120 million, down from £153 million.
Retailers throughout the excessive road are coming below strain from the rising price of wages and taxes, together with nationwide insurance coverage and enterprise charges, whereas shopper spending stays weak amid considerations about geopolitical occasions and inflation on fundamentals resembling meals and vitality.
The fast rise of low cost on-line sellers resembling Shein, Temu and Amazon has additionally put excessive road retailers below strain as customer numbers to bodily shops stay subdued.
Matthew Padian, an insolvency professional on the legislation agency Stevens & Bolton, stated he anticipated extra retailers would flip to restructuring plans to cut back their retailer estates as the brand new system, launched throughout the pandemic, turned higher understood.
“There will probably be extra coming down the monitor because it doesn’t seem like it’s getting any simpler for retailers,” he stated.
By Sarah Butler
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