New Look has been dealt a fresh blow as a credit insurer has stopped selling its suppliers cover against insolvency.
Euler Hermes is understood to have stopped selling protection against insolvency to the retailer’s suppliers but is still expected to cover any shipments signed off before it made the decision to stop new sales.
Another insurer has reduced coverage levels to New Look suppliers but has not withdrawn it altogether, according to The Sunday Times.
Credit insurance protects suppliers in the event of their customer going bust between an order being accepted and payment being made. If suppliers are not granted cover, retailers can struggle to buy sufficient stock or have no choice but to accept punishing payment terms.
New Look’s woes follow that of electricals retailer Maplin, which hit headlines before Christmas when several credit insurers stopped selling insurance to its suppliers.
The last time that the cutting of credit insurance was a consistent issue for retailers was in the aftermath of the 2008 credit crunch, when it contributed to the collapse of retailers such as Woolworths.
New Look, which has high levels of debt and an extensive store estate, has been through the mill in recent months.
Chief executive Anders Kristiansen departed amid falling sales and a disagreement over strategy in September, with New Look opting to re-hire former boss Alistair McGeorge.
McGeorge is currently trying to engineer a turnaround, which is based around a less fashion-forward, more democratic aesthetic, designed to appeal to women between the ages of 20 and 40.
New Look and Euler Hermes both declined to comment.