Hundreds of Jobs at Risk as River Island faces Collapse

High street fashion chain River Island is on the brink of collapse unless a last-ditch rescue deal is approved.

The retailer is facing a liquidity crisis that could result in hundreds losing their jobs “within weeks” and 33 stores closing.

A further 71 stores may see rent cuts, with debts written off if a court approves a survival plan next week.

River Island’s advisors PwC will present the proposals to the High Court, hoping to secure creditor approval.

If successful, an emergency loan from the Lewis family, the billionaire founders, will be unlocked.

If rejected, the business will run out of money by the end of August.

In a stark warning to creditors, the company said it “will not be able to continue trading as a going concern” and “would be subject to administration or other insolvency proceedings”.

The PwC report shows River Island needs £10 million by the second week of September, a figure that could rise to £50 million before Christmas.

As part of the plan, River Island could walk away from tens of millions in debt, including unpaid rent to major landlords like British Land, the Crown Estate and Mike Ashley’s Frasers Group.

The proposal is expected to face resistance from some within the property sector.

One landlord said: “This is family-run, they’ve just overstretched, and it’s unfair that the landlords will struggle because they haven’t maintained their relevance.”

Industry insiders say the business expanded too rapidly and failed to adapt to the shift in consumer behaviour.

River Island’s management blamed spiralling operational costs and the continued move of shoppers away from the high street.

Sales fell by 19% in 2023, resulting in a £33.2 million loss.

It is unclear how many of its 5,500 workers will be impacted.

A River Island spokesperson said:

“River Island circulated its proposals for a Restructuring Plan to creditors on June 20th.”

“In combination with the company’s ongoing transformation strategy, the plan is a proactive measure to place the company on a firm footing.

“We have been having positive conversations with key stakeholders and are confident that we will achieve approval of the Plan in the next few weeks.”

River Island was founded in 1948 under the Lewis and Chelsea Girl brands before rebranding in the 1980s.

Ben Lewis, the founder’s nephew, returned as CEO earlier this year.

Unless a rescue plan is approved in court, the high street may soon lose one of its best-known names.