The High Street has been plunged into fresh turmoil amid debt worries and falling sales at New Look and House of Fraser.
The retailers’ troubles come as hundreds of restaurants and shops prepare to close stores and axe jobs as more people choose to stay and home and shop online.
In the latest blow for the High Street, one of House of Fraser’s leading credit insurers has pulled the plug on cover for suppliers that provide the department store with its stock.
Worry: House of Fraser confirmed that about 20 of its 650 suppliers would be affected by removal of the insurance
The cover is seen as standard in the industry and provides suppliers with protection in case the retailer cannot pay its bills.
House of Fraser confirmed that about 20 of its 650 suppliers would be affected by removal of the insurance.
Concerns for the department store are mounting after it wrote to landlords last month asking for rent reductions, sparking concerns over its finances.
It is also reportedly looking into selling off or reducing the size of failing department stores amid falling sales. House of Fraser has 58 stores across the UK and three overseas.
Latest results show that sales tumbled 2.9 per cent in the six weeks to December 23 after it reported a half-year loss in September.
Alex Williamson, chief executive, said last month that House of Fraser would not start slashing prices on its goods in order to boost sales.
‘What’s important is to keep our discipline in selling those products that are loved by customers and profitable for House of Fraser,’ he said.
More disappointing results are expected for the High Street this week, as losses at fashion chain New Look are predicted to balloon further amid turnaround efforts.
Expected losses could grow to between £5m and £10m for the last nine months of the year according to reports, compared to a £111.5m profit reported a year ago. New Look has been losing sales in recent months after a questionable move by former chief executive Anders Kristiansen to focus on selling clothes to a younger audience which alienated its older long-standing customers.
In August, the retailer struggled to justify its new strategy as it reported slumping online and store sales despite rival online-only retailers like Asos, which sell the New Look brand, managing to shift its stock.
The High Street chain has since parachuted in former boss Alistair McGeorge to turn around the business after he rescued it five years ago. New Look’s past mistakes look set to cost the firm as it deals with shifting old stock and overhauling its image. Its suppliers have also seen vital insurance cover blocked recently, as insurers’ nerves were shot over fears of more dismal sales.
And last month reports suggested that New Look was preparing to close up to 60 stores as its South African owner considered its options for the ailing retailer.