Suppliers pause dealings with Asos - report
By Abigail Townsend
Date: Wednesday 07 Jun 2023
(Sharecast News) - Suppliers to Asos are cutting ties with the fast fashion retailer, it was reported on Wednesday, over credit insurance concerns.
The Times said that suppliers were responding to insurers reducing or withdrawing trade credit insurance following a slide in earnings at Asos. Allianz Trade is understood to have withdrawn cover entirely, while Atradius has reduced cover, the newspaper noted.
Credit insurance protects suppliers against the risk of their customers going bust in between them accepting an order and receiving payment. A long-standing part of the supply chain, if cover is not available suppliers will often ask for payment before fulfilling an order, or simply not deal with that retailer.
Asos, which was demoted from the FTSE 250 last week, has been rocked in recent months by stiff competition, a return to bricks and mortar shopping post pandemic, the cost of living crisis and surging product returns. First half pre-tax losses came in at £290.9m while revenues fell 10% to £1.8bn.
The Times cited a number of suppliers, all unnamed, one of whom said they weren't delivering "as insurance has been lost".
Another said it had yet to supply the retailer this year, and wouldn't do so again "until they get credit insurance backing. Credit insurance is so important these days and makes doing business not as risky.
"The only way [Asos is] going to get people to supply to them again is to pay earlier, the drawback being that its eats into cash."
An Asos spokesperson said: "While trade credit insurance cover has been tightening across the retail industry, we have seen no impact on our trading."
As at 1030 BST, shares in Asos were off 2% at 350.32p.
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