Woolworths entertainment division EUK has vowed that retailers will remain unaffected in the run-up to Christmas despite the withdrawal of credit insurance from most of its suppliers.

The company said that while the majority of its suppliers that pay for credit insurance cover have either had it removed or reduced, its major suppliers continue to supply EUK.

EUK managing director Steve Lewis said that retailers including Zavvi, Asda, Sainsbury’s and Woolworths itself can expect a good service over Christmas.

“We have spoken to our suppliers and have come up with a suitable arrangement with each one,” Lewis told Retail Week. “The suppliers have been very supportive. If they have lost their level of credit insurance, most are trading uninsured to support the EUK model.

“I expect there to be minimal – if any – impact on the retailers. I’m absolutely confident we will give our retailers a very good level of service in the forthcoming months, in terms of levels of on-shelf availability.”

It is understood that EUK’s normal time frame to pay suppliers, which ranges between 30 and 90 days, has been reduced as part of its compromise with them. Lewis denied the company was having to pay cash in advance for stock and said none of its major suppliers had ended supply.

“Without doubt, what [worsened] the situation was all the noise in the news recently about AIG. The [UK’s] financial difficulty equally had an impact on the insurance market generally,” said Lewis.

“It has led some insurance companies to review their cover. We are part of a retail group and retail within the insurance market is seen as a challenge market.”

Lewis confirmed that Woolworths and book wholesaler Bertrams were having similar conversations with all their major suppliers and were also coming to “suitable arrangements” to ensure supply continues.

He said that credit insurance companies are waiting to see how Woolworths trades over the fourth quarter before reviewing their position again.

- Speculation that Asda might buy EUK was dismissed as highly unlikely by sources close to the grocer and Woolworths.