River Island faces rent cuts and store closures as restructuring looms

River Island, the high street retailer founded by the Lewis family in 1948 as Chelsea Girl, is set to implement sweeping rent cuts and close a number of stores amid fierce competition and rising pressures from online rivals such as Shein. The move comes after the company failed to renegotiate more favourable rent and lease terms with landlords during the pandemic, keeping costs at pre-pandemic levels which has ultimately undermined the business’s financial resilience.

The Lewis family, who remain at the helm of River Island and have become the company’s largest creditor via their investment firm Blue Coast Capital, will leverage their controlling stake to force through a restructuring plan. This strategy will see rents slashed by 25 per cent at some locations, up to 40 per cent at others, with certain landlords set to receive no rent at all. The group’s property portfolio currently comprises 230 stores, many of which have been burdened by inflexible and expensive leases as a consequence of the company’s sluggish adaptation to the digital retail landscape.

Clive Lewis, chairman and son of the founder Bernard Lewis, is a director of the loan provider which has exposure totalling £205 million. The family’s wider corporate interests are managed through LFH International Limited in Jersey. Chief executive Ben Lewis, the founder’s nephew, returned to take the reins of the company earlier this year as River Island continues to undergo strategic shifts in an effort to secure its position in the sector.

The proposed restructuring plan will require approval from 75 per cent of creditors at a vote scheduled for 1 August. Given Blue Coast Capital’s dominance as the principal lender, industry observers suggest the vote will pass without significant resistance. Landlords, though reluctant, recognise that rejecting the agreement could plunge the business into administration, leading to the closure of all stores and substantial job losses.

Despite reliably paying rent through the pandemic, River Island’s recent trading performance has consistently lagged behind peers, with sales figures signalling persistent challenges. The retailer’s attempt to stick with pre-existing arrangements during recent years is credited by property sources as a key factor behind its mounting woes. Criticism has also been levelled at the company for being slow to modernise and for overextending its bricks-and-mortar presence, incurring costly long-term commitments in a rapidly evolving retail landscape.

Current circumstances have placed landlords in a difficult position, with some prepared to accept no rent in return for the company at least covering business rates on premises. The alternative, many concede, is far worse. The coming weeks will determine whether River Island’s ambitious rescue plan will deliver renewed stability for one of Britain’s best-known fashion retailers.