House of Fraser faces a cash squeeze after a leading credit insurer decided to stop offering cover to some of its suppliers.
The department store chain has come under pressure from the shift to online shopping and the high cost of running its 59 stores. Sales fell 2.9% in its shops and 7.5% on its website over Christmas, though House of Fraser said trading had picked up slightly after New Year’s Day.
Credit insurers protect suppliers against the risk of a retailer going bust between the point of accepting an order and payment being made. When insurers refuse to provide cover, suppliers often demand payment up front, putting extra pressure on the retailer’s working capital. The loss of cover was seen as a contributing factor in the demise of Woolworths, Comet and BHS.
