River Island plans to shut 33 of its 230 shops and an extra 71 are in danger beneath a restructuring programme that might put greater than 1,000 jobs on the road.
The family-owned firm, which employs about 5,500 folks, blamed a “migration of customers from the excessive avenue to on-line” and better prices for the necessity to make the drastic modifications 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 hold these to a minimal.”
He stated, “River Island is a much-loved retailer, with a decades-long historical past on the British excessive avenue. Nonetheless, the well-documented migration of customers from the excessive avenue to on-line has left the enterprise with a big portfolio of shops that’s not aligned to our clients’ 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 accordance with the most recent 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 equivalent to shopping for and merchandising.
River Island was previously often known as Chelsea Woman, and it started promoting clothes beneath the identify Lewis’s within the Forties.
Its troubles have emerged because the funds chain Poundland launched an identical restructuring programme, with the eventual intention 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 identical loss to the earlier 12 months. Gross sales are anticipated to fall to £120 million, down from £153 million.
Retailers throughout the excessive avenue are coming beneath strain from the rising value of wages and taxes, together with nationwide insurance coverage and enterprise charges, whereas client spending stays weak amid issues about geopolitical occasions and inflation on fundamentals equivalent to meals and power.
The speedy rise of low-cost on-line sellers equivalent to Shein, Temu and Amazon has additionally put excessive avenue retailers beneath strain as customer numbers to bodily shops stay subdued.
Matthew Padian, an insolvency skilled on the regulation 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 in the course of the pandemic, turned higher understood.
“There shall be extra coming down the monitor because it doesn’t appear to be it’s getting any simpler for retailers,” he stated.
By Sarah Butler
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