Major high street fashion retailer ‘on brink of collapse' as SIX stores in Scotland set to close
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A MAJOR high street fashion retailer is reportedly on the brink of collapse and could run out of money by the end of August.
Bosses at River Island are hoping their latest rescue plans are given the green light by creditors and landlords, which will "stave off a severe liquidity crisis".
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River Island is said to be on the 'brink of collapse'
Credit: Getty
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Bosses previously confirmed the 33 high street branches that will shut
Credit: Alamy
According to The Telegraph, the proposal includes shutting 33 stores, cutting rents on a further 71 branches, and writing off debts.
The iconic fashion chain already revealed which shops will pull the shutters down for good, and the list includes six branches in Scotland.
Last month, bosses said that those earmarked for closure will stay open until January 2026 to make the most of peak trading.
The firm's proposals are set to go before the High Court next week and will need to be agreed by 75 per cent of creditors to get the go-ahead.
If it does, then the retailer will receive an emergency £40million loan from owners, the billionaire Lewis family.
This would allow the high street chain to pay its bills and keep the brand afloat.
The migration of shoppers from the high street to online has left the business with a large portfolio of stores that is no longer aligned to our customers' needs
Ben Lewis
If the proposals are not given the green light, then River Island "will effectively run out of money by the end of August", according to The Telegraph.
This would mean that it could not continue trading and 'would be subject to administration or other insolvency proceedings'.
However, sources close to the situation revealed that details of the plan have been met with some pushback.
This is because landlords of the 24 stores that are not being closed could be asked to move to a zero-rent model.
I'm a size 20... my friends are an 8 and short size 12 - we tried the same four occasion glam dresses and all looked fab
And the retailer has also proposed three-year rent cuts of between 75 per cent and 25 per cent.
A 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."
The retailer drafted in advisers from PricewaterhouseCoopers (PwC) just months ago to come up with money-saving solutions.
Which River Island stores face closure?
HERE is the full list of all the 33 stores that will shut: Beckton
Bangor Bloomfield
Wrexham
Edinburgh Princes Street
Hereford
Surrey Quays
Didcot
Sutton Coldfield
Aylesbury
Burton-Upon-Trent
Northwich
Taunton
Workington
Falkirk
Cumbernauld
Kirkcaldy
Gloucester
Hartlepool
Brighton
Lisburn
Norwich
Oxford
Poole
Kilmarnock
Hanley
Barnstaple
Grimsby
Leeds Birstall Park
Rochdale
Great Yarmouth
St Helens
Stockton On Tees
Perth
And the advisers have warned that if plans are not approved, then the retailer will face a £10million 'funding need' in early September.
This will then add up to a total of £50million before the end of 2025.
River Island currently employs around 5,500 workers across the UK.
However, bosses have not said how many jobs are at risk due to the closures.
River Island has said the store closures are a result of rising costs over recent years and more customers switching to online shopping.
We regret any job losses as a result of store closures, and we will try to keep these to a minimum
Ben Lewis
The firm said it means its "large portfolio of stores… is no longer aligned to our customers' needs'.
The six stores across Scotland that are set to close include the branches in Perth, Kilmarnock, Falkirk, Cumbernauld, Kirkcaldy, and Edinburgh's Princes Street.
The move came off the back of poor financial results.
Accounts for River Island Clothing Co for the year ending December 30, 2023, showed the firm made a £33.2million pre-tax loss.
Then the turnover during the following 12 months fell by more than 19 per cent to £578.1million.
Ben Lewis, CEO of River Island, previously said: "River Island is a much-loved retailer, with a decades-long history on the British high street.
"However, the well-documented migration of shoppers from the high street to online has left the business with a large portfolio of stores that is no longer aligned to our customers' needs.
"The sharp rise in the cost of doing business over the last few years has only added to the financial burden.
"We have a clear strategy to transform the business to ensure its long-term viability.
"Recent improvements in our fashion offer and in-store shopping experience are already showing very positive results.
"But it is only with a restructuring plan that we will be able to see this strategy through and secure River Island's future as a profitable retail business.
"We regret any job losses as a result of store closures, and we will try to keep these to a minimum.'
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