Having already seen its credit rating downgraded to junk status back in December, one of the giants of the UK fashion industry is reeling once more – this time, thanks to problems surrounding credit insurance.
A report by This is Money said QBE has reduced the coverage it provides to New Look suppliers, while Euler Hermes has stopped insuring new shipments altogether. What’s worse is that Euler Hermes is said to be just “one of” such providers who have turned their backs on the retailer, according to The Sunday Times – although it will reportedly continue to back shipments signed before the decision with protection.
New Look is not the only retailer to be hit by credit insurance woes recently. Discount chain Poundland has faced problems as well, with issues swirling over an alleged accounting scandal its parent company Steinhoff is embroiled in. Embattled South African businessman Christo Wiese, Steinhoff’s largest shareholder, also owns about a third of New Look’s parent firm Brait.
The latest development at New Look is likely to derail its plans for a turnaround. The retailer has a debt pile of more than £1 million and saw its revenue slip by 4.5% to £686 million during the six months ending on September 23.