Fashion giant that started as bomb site fruit stall calls in PwC for emergency restructuring after losing £33.2m – as retail bloodbath continues with Rachel Reeves’ Budget blamed for crisis
One of Britain’s most beloved fashion chains is fighting for survival as River Island bosses work on a ‘radical rescue plan’ that could see significant store closures and thousands of job losses across the country.
The 77-year-old retailer, which operates 230 stores and employs 5,500 staff, has called in consultants from PricewaterhouseCoopers (PwC) to devise a formal restructuring plan that could be finalised within weeks.
The dramatic move comes after the fashion giant posted a devastating £33.2 million pre-tax loss for 2023, with turnover plummeting by more than 19% to £578.1 million – a crushing blow for a brand that has been a high street staple since 1948.
Sources close to the negotiations told Sky News that while no firm decisions have been made, a “significant” number of stores and jobs could be axed as the company battles to avoid collapse.
From Bomb Site to Fashion Empire
The potential demise of River Island would mark a tragic end to one of Britain’s greatest retail success stories. Founded by Bernard Lewis in 1948 on a bombed-out site in Notting Hill, the business began as a fruit and vegetable stall before pivoting to fashion.
The 98-year-old founder, who still works five days a week at the company’s West London headquarters, transformed his humble market stall into a fashion empire that helped define British style for generations.
Originally called Lewis Separates, the chain became Chelsea Girl in the 1960s – riding the wave of Swinging London and becoming synonymous with the mini-dress revolution that took the fashion world by storm.
In 1988, Bernard’s son Leonard came up with the River Island name while on his boat on the Thames, launching what would become one of the UK’s most recognisable fashion brands.
Family Drama Behind the Scenes
The crisis comes amid significant upheaval in the company’s leadership. In February, Ben Lewis – nephew of founder Bernard – dramatically returned as CEO after previous boss Richard Bradbury stepped down as executive chair.
This marked Lewis’s second stint at the helm, having previously led the company for nearly a decade before stepping down in 2019. His return was seen as the family tightening its grip on the business during its darkest hour.
Clive Lewis, Bernard’s son, also returned to his previous position as non-executive chair, in what insiders described as a “closing of ranks” by the Lewis dynasty.
The company had already begun cost-cutting measures in January, with redundancies at its London head office affecting departments including buying, merchandising and HR.
Court-Supervised Rescue
The restructuring plan being drawn up by PwC would be a court-supervised process allowing River Island to compromise with creditors, particularly landlords, in a desperate bid to avoid insolvency.
Similar rescue deals have been used by other struggling retailers including Prezzo and HobbyKraft, allowing them to close unprofitable stores and renegotiate rents on remaining locations.
One source said the plan could emerge within weeks if it proceeds, though it remains unclear exactly how many of the chain’s 230 stores might face the axe.
The company had previously hired consulting firm AlixPartners in January to focus on cutting costs and boosting profits, but that role has now been superseded by PwC’s more drastic intervention.
‘Fast Changing’ Market Blamed
In its latest Companies House filings, River Island Holdings Limited painted a bleak picture of the challenges facing the business, warning of “multitude of financial and operational risks.
The company blamed a “fast changing” market with customers demanding “more diverse, convenient and speedier shopping journeys” while facing “increasing competition especially in the digital space.
The key business risks for the group are the pressures of a highly competitive and changing retail environment combined with increased economic uncertainty,” the filing stated.
It added: “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.
Rachel Reeves’ Budget ‘Final Straw’
Retail insiders have pointed to Chancellor Rachel Reeves‘ autumn Budget as the final straw for many struggling chains, with tax changes hammering an already fragile sector.
The crisis at River Island is just the latest in a string of retail collapses, with well-known chains including Lakeland and The Original Factory Shop forced to seek new owners in recent months.
Even discount giant Poundland is in the final stages of an auction process, with potential buyers including Hilco Capital and Gordon Brothers circling the business.
Retailers have complained bitterly about the impact of tax changes announced by Rachel Reeves,” one industry source said. “For businesses already on the edge, it’s been the final nail in the coffin.”
What It Means for Shoppers
For the millions of customers who have grown up shopping at River Island, the potential loss of stores will be devastating. The chain has been a go-to destination for affordable fashion for nearly eight decades.
From its pioneering role in bringing the mini-dress to British high streets in the 1960s to its current position as a fast-fashion giant, River Island has dressed generations of British women and men.
The retailer was one of the first to manufacture its own clothes rather than buying through wholesalers, and pioneered sourcing from Hong Kong – innovations that helped define modern retail.
Jobs Massacre Feared
With 5,500 employees across the UK, any significant restructuring could result in one of the biggest job losses in recent retail history.
Staff at the company’s 230 stores are anxiously waiting to learn their fate, with many fearing the worst as similar chains have slashed their workforce to survive.
The potential job losses would add to the mounting unemployment crisis on Britain’s high streets, where traditional retailers continue to struggle against online competition and changing shopping habits.
Digital Revolution’s Victims
River Island’s struggles highlight the brutal reality facing traditional retailers in the digital age. Despite heavy investment in technology and online operations, the company has struggled to compete with pure-play online retailers.
Former CEO Will Kernan, who took over from Ben Lewis in 2019 before being replaced by him again this year, had been brought in specifically to boost digital and international operations.
But even with what then-CEO Ben Lewis described in 2018 as ambitions to be “not just a leading retailer but a leading tech company,” the firm has been unable to stem losses.
What Happens Next
Sources close to the restructuring talks say proposals could be finalised within weeks, though they remain subject to sign-off by the Lewis family and other stakeholders.
If approved, the plan would likely see River Island follow other retailers in closing underperforming stores while trying to salvage profitable locations and its online business.
The company declined to comment when approached about the restructuring plans, but insiders say an announcement could come as soon as this month.
For now, shoppers can still visit their local River Island, but with a court-supervised restructuring looming, many stores may not survive to see another season.
As Britain’s retail apocalypse continues to claim victims, the potential fall of River Island serves as a stark reminder that even the most established names are not immune to the perfect storm battering the high street.
Image credit: River Island, The Springs, Thorpe Park, Leeds (7th October 2022) by Mtaylor848, taken on 7 October 2022 at The Springs, Thorpe Park business park in Leeds, licensed under CC BY‑SA 4.0 .
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