Aurora Fashions has suffered a reduction of credit insurance after uncertainty surrounding the group’s restructuring and the challenging clothing market spooked insurers.

Sources told Retail Week that credit insurers had “scaled back” cover for the retail group’s supplier base. Aurora is in the process of demerging its brands, which is understood to have made it a more risky prospect for credit insurers, with Coast set to become a stand-alone alone business and Oasis and Warehouse coming together under new parent company Fresh Channel.

Aurora Fashion chief financial officer Richard Glanville said: “Credit insurers are reducing their exposure to the retail market generally, and we are no exception. However, we have very longstanding relationships with a limited number of suppliers and have not experienced nor anticipate experiencing any issues in our supply chain.”

The Sun reported that giant Euler Hermes was one of the credit insurers to reduce cover.

It is thought Aurora is not the only fashion retailer to suffer a reduction in credit insurance. Insurers have been concerned by poor clothing sales since the start of the year.

Figures revealed by BDO this week showed that the bitterly cold March weather resulted in a dip in fashion like-for-like sales of 3.4% as consumers shunned spring lines in the face of sub-zero temperatures.

Marks & Spencer is expected to reveal a dip in clothing sales for the seventh quarter in a row when it updates the market tomorrow (Thursday).  The retailer is expected to reveal that general merchandise sales – comprising fashion and home – fell 4.5% in the fourth quarter.

Retailers to have suffered a credit insurance withdrawal in recent years include Dreams and Comet. It became a point of focus for many retailers throughout the downturn who argued that credit insurers were ‘fair weather friends’. In 2009, the Labour Government stepped in, offering a credit insurance top up scheme in 2009, although the scheme was largely deemed a failure.