Debenhams faces new problems as insurers pull out

London - Embattled department store Debenhams is facing a barrage of problems as its leading credit insurer will no longer cover the retailer’s suppliers.

Atradius, a longtime insurance provider for Debenhams, has halted its credit cover for companies supplying the store amid fears of future trading in the run-up to the holiday season.

According to City AM the move will put growing strain on Debenhams’ cash reserves, as suppliers start to demand payment upfront instead of payment terms without any credit to back up their merchandise.

Last week Debenhams presented a turnaround strategy to its investors, with an aim to revive the ailing business which has seen losses due to higher operational costs and consumer preference to shop online.

Debenhams in a statement said: “Regrettably, we understand Atradius is reducing cover as a result of repeated press speculation about Debenhams. 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.”

Photo credit: Debenhams Christmas lights, source Wikimedia Commons. Article source City AM