Mon. May 25th, 2020

Business Ideas UK


Debenhams shares slide on credit insurer woes

Shares in Debenhams fell up to 7% on Monday as the retailer battled suggestions it was facing a crisis of confidence among credit insurers.

The Sunday Times reported at the weekend that one provider had reduced cover to the struggling department store chain’s suppliers while two others had withdrawn cover to some new shipments completely.

Credit insurance, which guards against the possibility of a supplier not being paid in the event of a customer going out of business, is an important cog in the retail business.
In the sector a lack of policies could force suppliers to demand up-front payments for stock – putting extra pressure on its finances.
It is understood that the crisis facing the high street this year has made the credit insurance sector more cautious generally as big names, including Toys R Us, have gone to the wall while others have sought rescue deals in a bid to cut costs.

Image: House of Fraser is closing more than half its UK stores
:: Poundworld closes 80 stores with loss of 1,024 jobs
Debenhams said its orders continued to be covered by the three insurers – Euler Hermes, Atradius and Coface.
A spokesperson said: “Debenhams has a healthy balance sheet and cash position.

“All the credit insurers continue to provide cover to our suppliers and we maintain a constructive relationship with them.
“It is well-documented that market conditions are challenging, but Debenhams continues to be profitable, has a clear strategy in place and is taking decisive actions to strengthen the business‎.”
Shares – 60% down in the year to date – were trading flat on the day by mid-morning after their initial wobble at the open. Shares ended the day down by 4.8%.
The retailer, which employs 25,000 people, has issued three profit warnings this year as it battles tough trading conditions which have hit most retailers.
While the high street, and supermarkets in particular, have enjoyed a boost from the Royal Wedding, good summer weather and football’s World Cup, Debenhams said last month that trading remained difficult.

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It said pre-tax profits for the year to 2 September were now expected to come in between £35m-£40m – down from a previously revised forecast of £50.3m.
One of its biggest rivals, House of Fraser, is carrying out a rescue plan involving the closure of dozens of stores while M&S is also trimming its store estate as it attempts to catch up in the digital sales sphere.

Source: Sky

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