Credit insurer Allianz Trade is said to have reduced its cover for suppliers linked to Boohoo Group, as the retailer continues to report falling profits amid a challenging trading environment.
According to Drapers, the reduction will impact all of the group’s suppliers, however exact amounts may vary.
The publication said that the decision was based on falling consumer demand, macroeconomic challenges and Boohoo’s trading performance.
In September, for the six months to August 31, the group reported that its net revenue had declined 10 percent to 882.4 million pounds.
The company, which owns the likes of Boohoo, Coast, PrettyLittleThing and Nasty Gal, said in its financial report that it was expecting a similar rate of revenue decline to persist over the remainder of the financial year if the “current conditions” continued.
It had further reported a 13 percent decrease in gross profits to 463.5 million pounds, compared to 533.3 million pounds in the previous year.
Boohoo added that it had adjusted its EBITDA margins to be between three and five percent, compared to the previously guided range of four and seven percent.
While the company declined Drapers’ request for a comment, one of its suppliers told the publication that his insurance cover was first reduced eight months ago, and it is now set to be reduced again.