Credit insurers reduce cover for challenged Debenhams

Credit insurers have reduced the cover offered to suppliers of department store Debenhams, it has emerged over the weekend.

Suppliers use credit insurance to offer protection from the point an order is placed to payment being made and insurers reducing or withdrawing support is a sign they believe there is a high risk of non-payment.

Euler Hermes, a leading credit insurer, is one of those to have reduced cover for suppliers to Debenhams along with Coface and Atradius.

However a spokesperson for the retailer stressed to The Guardian that support from insurers had been reduced and not withdrawn completely and, while the business faced challenges, it was in a strong cash position.

“Debenhams has a healthy balance sheet and cash position. All the credit insurers continue to provide cover to our suppliers and we maintain a constructive relationship with them," the spokesperson said.

The reduction of support comes one month after Debenhams released its third profits warning in a year. It now expects pre-tax profit for FY2018 to be in the range of £35m-£40m, as opposed to the market consensus of £50.3m.