Debenhams denies reports hinting at 'cash crunch' over supplier insurance

Refuting media reports stating insurers had cut cover for the company’s suppliers, British department store chain Debenhams has said that it continues to enjoy a “healthy” cash position.

A Debenhams spokesperson told FashionUnited: “Debenhams has a healthy balance sheet and cash position. All the credit insurers continue to provide cover to our suppliers and we maintain a constructive relationship with them. It is well-documented that market conditions are challenging, but Debenhams continues to be profitable, has a clear strategy in place and is taking decisive actions to strengthen the business.”

The Sunday Times had reported that Debenhams, which has already issued three profit warnings this year, was facing a cash crunch after credit insurers reduced or refused cover for its suppliers.

In its recent trading update, Debenhams had announced that group like-for-like sales for the 15 weeks dropped 1.7 percent and were down 2.1 percent in the 41 weeks, while in constant currency like-for-like sales declined 2.2 percent and 2.6 percent respectively.

Commenting on the company’s performance, Sergio Bucher, the company’s CEO had said in a statement: "It is well-documented that these are exceptionally difficult times in UK retail, and our trading performance in this quarter reflects that. We don't see these conditions changing in the near future and, because it is our priority to maintain a robust balance sheet, we are making very careful choices about how we deploy capital."

Picture credit:Debenhams press area