Debenhams faces a battle on yet another front as it is revealed one of its leading credit insurers has cut the cover provided to the retailer’s suppliers.
Atradius has stopped all of its credit cover for Debenhams’ suppliers ahead of reported fears over the department store’s health in the run up to Christmas.
The decision will pile on yet more pressure on Debenhams’ cash reserves, as without insurance, suppliers will demand payment upfront, putting yet more strain on the retailer’s working capital.
The news comes as Debenhams unveiled a turnaround plan to investors last week in its latest efforts to receive it business model.
“Regrettably, we understand Atradius is reducing cover as a result of repeated press speculation about Debenhams,” a spokesperson for Debenhams told press.
“Credit insurers typically tighten cover when the retail industry is under pressure, and this is an issue affecting many retailers. We are managing this with our suppliers and continue to maintain more than adequate headroom on our facilities,” they added.
The move comes just a few weeks after Sir Philip Green’s Arcadia business had its credit insurance cut roughly in half by Euler Hermes.