Excessive avenue mainstay River Island faces an unsure future after its proposed restructuring plan failed to realize help from all creditor lessons in a key vote on Friday. The end result now rests with a choose, who will resolve on a sanction listening to this Thursday (8 August).
The 76-year-old retailer secured approval from round 80% of its collectors by worth below the court-supervised vote. Nonetheless, restructuring guidelines require every creditor class – together with landlords, commerce collectors and enterprise price authorities – to individually again the plan with at the least 75% help for it to be robotically sanctioned. That threshold was not met throughout the board.
The proposed plan consists of slicing rents (some to zero) throughout elements of its 230-strong retailer property, alongside closing 33 shops and writing off some debt. The plan has reportedly confronted robust resistance from landlords, lots of whom stand to lose out if the lease cuts are enforced.
River Island has warned that with out courtroom approval, it may fall into administration as early as September.
A spokesperson for the retailer mentioned: “Together with the corporate’s transformation technique, the plan is a proactive measure to put the corporate on a agency footing.
“We’ve been having constructive conversations with key stakeholders and are assured that we are going to obtain approval of the plan within the coming days.”
If permitted, the Lewis household, which based the enterprise in 1948, is predicted to inject £40 million by way of Blue Coast Capital, their private funding firm. Blue Coast is at the moment the group’s largest creditor, with publicity of £270 million.
The disaster at River Island has been constructing over the previous 12 months. In June, the corporate ready a proper restructuring plan that might put a major variety of shops and jobs in danger. PwC took over advisory duties from AlixPartners, which had been employed in early 2024 following a £32.3 million pre-tax loss in 2023 and a 19% fall in turnover to £578.1 million.
The corporate has cited a number of headwinds in current studies, together with rising operational prices, a pointy shopper shift to on-line buying and growing digital competitors from ultra-fast trend gamers similar to Shein.
In its most up-to-date submitting on Corporations Home, River Island acknowledged: “The marketplace for retailing of trend clothes is quick altering… with growing competitors, particularly within the digital area.”
To assist spearhead its turnaround technique, River Island has made a number of management modifications this 12 months. As a part of its plans for a “12 months of reset”, it appointed Suzy Slavid, Chief Government Officer of Wyse London, as its Buying and selling Supervisor Director in February. This was the identical month Ben Lewis rejoined as CEO. He beforehand held the CEO place at River Island for nearly a decade earlier than stepping down in 2019. His uncle, Bernard Lewis, is the founder and proprietor of River Island.
River Island is considered one of many retailers navigating robust circumstances throughout the UK’s excessive streets on account of financial and regulatory pressures. If River Island’s restructuring plan is rejected on Thursday, it dangers insolvency.
