River Island losses deepen as restructuring efforts take hold

River Island Clothing Co. Limited reported a sharply increased pre-tax loss of 64 million pounds for the 52 weeks ended December 28, 2024, nearly doubling the 33.2 million pounds loss from the previous year, as the retailer grappled with a challenging market and prepared for a major restructuring. The primary driver of this deepened loss was a significant 35.7 million pounds non-cash provision for unrecoverable debt owed by group undertakings.

Turnover for the year decreased by 7.1 percent to 537 million pounds. Despite cost reduction measures, this, along with inflationary pressures and lower margins, led to a 22.2 percent reduction in gross profit, falling to 21.4 million pounds. Operating loss nearly doubled, rising to 65.3 million pounds from 35.1 million pounds in the prior year.

The directors attributed the continued deterioration in trading performance to inflationary cost pressures, reduced customer volume and high street footfall, and a portfolio of stores that had become loss-making or commercially unviable due to size, location, or above-market rents.

Following the year end, the company secured approval for a formal Restructuring Plan (RP) under Part 26A of the Companies Act 2006, which was sanctioned by the High Court on August 8, 2025. This critical plan was necessitated by the material uncertainty over the company's ability to continue as a going concern, as covenant restrictions had rendered the Group's 40 million pounds revolving credit facility unavailable in the first half of 2025.

The key components of the RP and the parallel transformation plan aim to restore financial stability and profitability by store portfolio optimization, securing funding and cost reduction. The plan primarily focused on optimising the store estate, including the closure of 33 stores and the compromise of leases for a further 71 stores. The RP enabled the Group to secure new, committed funding, including a new 40 million pounds revolving credit facility with Blue Coast Finance until 2028.

The company's leadership team was overhauled at the end of 2024 and start of 2025 with the appointment of a new CFO and the return of Ben Lewis as CEO. According to the filing with Companies House, River Island is already seeing significant returns from the strategy, including improved gross margin percentage, significantly reduced costs, and a return to growth in underlying store sales, and they expect a significant improvement in profitability for 2025.