River Island owners draw up rescue plan for high street chain

The family behind River Island, the high street fashion retailer, is drawing up a radical rescue plan which could put significant numbers of stores and jobs at risk.

Sky News has learnt that the chain's owners have drafted in advisers from PricewaterhouseCoopers (PwC) to devise a formal restructuring plan. The proposals, which are expected to be finalised within weeks, are subject to sign-off, with sources insisting this weekend that any firm decisions about the future of the business have yet to be taken.

River Island is one of Britain's best-known clothing chains, operating roughly 230 stores across the country, and employing approximately 5,500 people. Previously named Lewis and Chelsea Girl, the business was founded in 1948 by Bernard Lewis, finally adopting its current brand four decades later.

Accounts for River Island Clothing Co for the 52 weeks ending 30 December, 2023 show the company made a £33.2m pre-tax loss. Turnover during the year fell by more than 19% to £578.1m.

A restructuring plan is a court-supervised process which enables companies facing financial difficulties to compromise creditors such as landlords in order to avoid insolvency proceedings. In recent years, it has been used by companies including the casual dining chain Prezzo and, more recently, Hobbycraft, the retailer now owned by Modella Capital.

One source said that if it proceeded a restructuring plan at River Island could emerge within weeks. This weekend, it was unclear how many stores and jobs might be under threat from a formal rescue deal.

In its latest accounts at Companies House, River Island Holdings Limited warned of a multitude of financial and operational risks to its business. "The market for retailing of fashion clothing is fast changing with customer preferences for more diverse, convenient and speedier shopping journeys and with increasing competition especially in the digital space," it said.

"The key business risks for the group are the pressures of a highly competitive and changing retail environment combined with increased economic uncertainty. "A number of geopolitical events have resulted in continuing supply chain disruption as well as energy, labour and food price increases, driving inflation and interest rates higher and resulting in weaker disposable income and lower consumer confidence." In January, Sky News reported that River Island had hired AlixPartners, the consulting firm, to undertake work on cost reductions and profit improvement.

AlixPartners' role is now understood to have been superseded by that of PwC. Retailers have complained bitterly about the impact of tax changes announced by Rachel Reeves, the chancellor, in last autumn's Budget.

Since then, a cluster of well-known chains, including Lakeland and The Original Factory Shop, have been forced to seek new owners. Poundland, the discount retail giant, is in the latter stages of an auction process, with Hilco Capital and Gordon Brothers remaining interested in acquiring it.

A spokesperson for River Island declined to comment..