The future of British fashion group Joules is facing even more uncertainty as credit insurance has been pulled from its suppliers, according to a report.
Allianz Trade - formerly Euler Hermes - has pulled cover for Joules’ suppliers, casting more doubt on whether high street giant Next will buy a stake in the struggling business, The Sunday Times reports.
Credit insurance protects against the risk that a supplier is not paid by a company if the customer goes insolvent.
The withdrawal of credit insurance can often lead to suppliers demanding cash upfront, which can pile more pressure on the company’s cash flow.
The news comes at a difficult time for Joules, which last month warned it expects to deliver a full year loss before tax and adjusting items “significantly below current market expectations”.
That profit warning and the resulting drop in shares reportedly cast doubt over plans by high street retailer Next to invest 15 million pounds into Joules.
A report last month by Sky News said the two companies are not close to agreeing the terms of an investment, just three weeks after they confirmed discussions.
Sources added that Next had not yet received sufficient financial information in order to make a formal proposal, with further doubts surrounding Joules’ initial valuation of 33 pence-a-share or more, as it revealed earlier this month.
A Joules spokesperson told Sky News that the company is continuing to have “positive discussions” with Next about adopting its Total Platform services to support its long-term growth, as well as a potential equity investment.