Brait falls as credit insurers get tough on New Look

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Brait falls as credit insurers get tough on New Look

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Published Date: 2018-01-09 | Source: Stephen Gunnion | Author: Stephen Gunnion

Brait falls as credit insurers get tough on New Look

UK newspapers report that credit insurers have stopped selling insolvency protection to the retailer's suppliers

Brait's shares fell as much as 8.2% yesterday after London's Sunday Times reported that credit insurer Euler Hermes had halted the sale of protection against insolvency to suppliers of New Look. It's the latest blow for Brait, which reduced the carrying value of its investment in the UK fashion chain to zero in November after it reported a first-half loss of £10.4 million. According to The Guardian newspaper, New Look was among the UK retailers that experienced tough Christmas trading conditions.

The Guardian reported yesterday that Euler Hermes is still expected to cover any shipments with protection signed before it made the decision to stop fresh sales. A second insurer is also believed to have reduced coverage levels to New Look's suppliers but hasn't halted credit protection altogether. Sales at New Look have been under pressure and the loss of protection means it may battle to buy sufficient new stock for face more onerous payment terms. It has debt in excess of £1 billion.

Related article: More New Look woes for Brait

The group has re-appointed Alistair McGeorge, who oversaw a turnaround and recovery between 2011 and 2014, to help restore sales, after admitting to misreading the market.

Christo Wiese, already under pressure from the sharp fall in Steinhof's shares since early December, owns about a third of Brait.

Brait's shares closed 4.4% lower at R42.68.



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