Debenhams denies cashflow problem as credit insurers tighten trading terms


Debenhams has said its cash position is “healthy” after reports some insurers have reduced cover for its suppliers.

The Sunday Times said the retailer was facing “a cash crunch” because some credit insurers had tightened their terms for Debenhams suppliers.

The department store said its relationship with credit insurers was “constructive” and all were continuing to provide cover to its suppliers.

Suppliers use credit insurance to cover them from the risk of not being paid.

When insurance firms reduce their cover or withdraw it altogether, it means they are concerned about the ability of their customers to pay their debts.

One major credit insurer, Euler Hermes, is understood to have reduced the amount of credit insurance it will provide to Debenhams’ suppliers for orders for the new season.

Meanwhile, some new suppliers are believed to have found it difficult to get credit insurance for Debenhams’ orders.

‘Challenging market’

Debenhams acknowledged market conditions were “challenging” but said it had “a clear strategy in place” and was taking “decisive actions to strengthen the business”‎.

The chain’s statement comes a month after it issued its third profit warning this year, saying full-year profits would be lower-than-expected.

The retailer is in the midst of a turnaround plan designed to cut costs and boost sales.

Chief executive Sergio Bucher, who joined Debenhams in 2016, aims to put more emphasis on food and beauty and improve the firm’s online platform.

Debenhams is not the only retailer struggling.

Earlier this week, rival Marks and Spencer, which has already said it will close 100 shops, warned it could be forced to close more stores as it battles to improve its fortunes.

Meanwhile administrators in charge of finding a buyer for the stricken Poundworld chain said on Friday a further 80 stores would close, resulting in 1,024 job losses.