New Look faces critical situation as insurers cut coverage for suppliers

London - New Look high street woes are only set to deepen, as credit insurers have reportedly pulled their coverage against insolvency to its suppliers.

Insurers such as Euler Hermes have pulled their coverage on new shipments of products to New Look, although it is still reportedly offering "residual" cover on existing orders, reported the Times. Other insurers, such as QBE, have lowered the level of cover for the high street fashion retailer, but have yet to withdraw it completely.

Credit insurance protects suppliers against the possibility of the company going under during the period between an order being processed and payment being made. The loss of such insurance means suppliers are likely to require an upfront payment from New Look concerning all future orders, which will place more pressure on New Look's capital.

The move comes as New Look continues to struggle with financial difficulties linked to declining sales and its 1.1 billion pound debt. The high street retailer reported an underlying operating loss of 10.4 million pounds in its financial report for the 26 weeks to September 23, a vast difference to the 59.3 million pound profit reported in the same period the year before.

The recent Steinhoff accounting scandal is also said to have led to a growing lack of confidence in New Look's ability to turn things around. Christo Weise, the owner of Brait, the private equity vehicle which acquired control of New Look in 2015, recently stepped down as chairman and interim chief executive of South African retailer Steinhoff after alarming accounting irregularities were unearthed.