// River Island to consider turning to CVA or administration
// The retailer may close some stores after the effects of coronavirus
River Island has reportedly become the latest fashion retailer to consider taking out a CVA or other form of administration as the Covid-19 pandemic takes its toll on trading.
The fashion retailer is seeking to close some of its stores and slash rents on others across its 300-strong estate, Retail Week reported.
However, executives have expressed concerns over whether creditors would approve of its CVA considering its financially stable position in the market.
- River Island to make 250 head office job redundancies
- 50 stores to shut with M&Co on brink of pre-pack administration
At least 75 per cent of creditors must approve for a company to successfully undertake a CVA, according to the 1986 Insolvency Act.
Just last month, River Island said it will make 250 head office staff redundant as a cost-cutting measure after the pandemic triggered a fall in sales and footfall.
Chief executive Will Kernan wrote to staff to inform them that the fashion retailer now has “a requirement for some 250 fewer people in the business”.
The retailer has also furloughed the majority of staff during lockdown.
At its last financial update in September 2019, River Island’s operating profits dropped from £80.6m to £35.1m, indicating its struggles pre-Covid.
Meanwhile, other retailers have turned to CVAs or other forms of administration as they continued to struggle with the effects of the pandemic.
Just this week DW Sports collapsed into administration blaming lockdown’s effects on sales, while the family that owns fashion operator M&Co is set to buy back the business via a pre-pack administration deal as part of efforts to save it from collapse.