Top credit insurer trims cover for THG suppliers

No comments

THG has become one of the latest retailers to reportedly see a reduction in the level of cover provided to its suppliers by one of the UK’s largest credit insurers.

Allianz Trade had trimmed back insurance cover for suppliers to THG, formerly known as The Hut Group, in recent weeks but continued to provide cover for them alongside other credit insurers, according to The Guardian.

Retail Week understands the amendment represents a small reduction in the overall level of credit insurance covering its supply chain and had no bearing on THG’s financial position.

Allianz Trade, formerly Euler Hermes, reportedly reduced its insurance cover for Asos suppliers by more than half in October and, according to Drapers, lowered levels of cover for Boohoo Group’s suppliers last month.

Credit insurance protects suppliers against the risk of customers going bust between the point of accepting an order and being paid – the withdrawal of such cover often prompts suppliers to demand cash from retailers upfront.

Both THG and Allianz declined to comment when approached by Retail Week.

The news comes after THG posted rising year-on-year revenues in October, driven by strong performances in the beauty and nutrition categories, while its full-year profit guidance remains unchanged.

For the third quarter, ending September 30, THG sales were up 2.1% to £518.6m, driven primarily by a 4.9% increase in beauty sales to £259.7m and a 2.9% growth in nutrition sales to £163.8m.

However, in September it drafted in new non-executive directors on the same day that it reported operating losses deepened to £89.2m for the half-year ending June 30.

In July, a call option agreement for a division of Japanese investment titan Softbank to acquire a $1.6bn (£1.3bn) stake in THG’s Ingenuity division was terminated.

At the time, THG said the share option agreement, which would have allowed one of Softbank’s subsidiaries to acquire a 20% stake in technology and logistics arm Ingenuity, was “terminated by mutual agreement”.

THG cited “global macroeconomic conditions” as the driving force behind the end of the call option, which was first announced in May 2021.