Suppliers to beds specialist Dreams have had credit insurance withdrawn by Euler Hermes.

It is thought that less than 20% of the market-leading retailer’s supplier base by turnover is covered by Euler Hermes. Sources told Retail Week that those suppliers are continuing to be fully supportive of Dreams and are willing to supply without insurance.

Between 30% and 40% of Dreams’ products are made in the retailer’s own factory, and it is thought that most of Dreams’ external supplier base self-insure, protecting the retailer and its suppliers from any sudden changes to supplier credit insurance cover.

Dreams has always paid suppliers in full and on time, sources said.

Credit insurers have been lambasted by retailers in recent years for pulling cover unnecessarily. They were blamed for the fall of retailers such as Zavvi, and more recently TJ Hughes.

Dreams remains a profit making business and clocked up EBITDA of £11.2m in the year to December 24.

A Euler Hermes spokeswoman confirmed on Thursday that the credit insurer has pulled cover.

She said: “Euler Hermes has issued notice to our clients that we will no longer be insuring sales to Dreams.  

“However this will not take effect for 30 days and so goods and services supplied within that period will still be insured as per current policy terms.

“This delay will give our clients time to review their position and make alternative arrangements as appropriate.  We will maintain an ongoing dialogue with Dreams and we will regularly review our position.”