Photo by Chris Talbot via Wikimedia Commons
Credit insurers have begun reducing their cover on New Look as troubles intensify for the high street chain.
Insurers including Euler Hermes have decreased their cover on goods to New Look, while other insurers have already been reducing their cover. The move means that suppliers who are struggling to find credit insurance will possibly require upfront payment from the fashion chain, placing more strain on its capital.
It is thought that the scandal that is currently overshadowing Steinhoff, the Poundland owner, has also had a knock-on effect on New Look.
Christo Wiese, the biggest shareholder of Steinhoff, controls New Look through Brait, an investment firm. Steinhoff has also been abandoned by credit insurers after the firm’s admission
Credit insurers have also been abandoning Steinhoff after the firm admitted to irregularities in accounting, and said that the company would have to restate its accounts from the period of 2015 and 2016.
Last month, Moody’s said that it was “uncertain” that New Look could recover its dropping profitability.
The ratings giant forecasted that the earnings before interest, tax, depreciation, and amortisation at the company would plunge to £50m in 2018, down from £155m during the past year. Moody’s said that the retail chain could have a hard time to service its £1.1bn debt.
New Look refused to comment on the matter.