Credit insurer Allianz Trade has slashed cover for Boohoo suppliers, which could hit the online retailer’s cashflow.
Cover has been cut by an average of 50 per cent, with some suppliers to the Manchester-based fast fashion giant finding their coverage cut to zero, according to The Sunday Times.
Credit insurance protects suppliers against the risk of their client going bust before payment is received.
When cover is unavailable, many suppliers demand payment for goods upfront, which has a knock-on effect on a buyer’s cashflow.
A Boohoo spokesman told the newspaper: “With the credit insurance capacity less than 50% utilised, we wouldn’t expect any real impact from the reduction.”
The firm has previously asked Turkish and Pakistani suppliers for a discount after it took a £90.7m loss for the year to February 28. https://www.prolificnorth.co.uk/news/boohoo-reports-ps907m-loss-cost-living-crisis-bites/
Sales had slipped by 11 per cent in the same period, although revenue was up 43 per cent on 2020’s results, the final pre-pandemic reporting year, while CEO John Lyttle predicted “a clear path to improved profitability and getting back to double-digit revenue growth.”
Boohoo’s most recent financial report, to February 28, revealed February cash reserves of £5.9m and a £325 million revolving credit facility.
