Poundland continues to operate with reduced credit insurance nine months after cover was downgraded in a move it was feared could lead to availability issues.
Downgrading of credit insurance, which covers suppliers against a business failing before paying for orders, has come before the collapse of some retailers. Maplin faced a cut to its credit insurance cover before entering administration in February.
When Poundland’s was reduced in December last year, in the wake of an accounting scandal at South African parent company Steinhoff, one supplier told The Grocer he would simply not provide any more stock as it was not his policy to operate without full cover.
Another supplier source said at the time trucks were being turned around mid-delivery as news of the downgrading emerged.
But nine months on, suppliers have “largely been operating without it ever since,” a Poundland spokesman said this week, adding: “It’s been barely discernible by customers in store.
“That’s because our suppliers can see our performance and have been largely prepared to self-insure.”
He said Poundland was “trading well” and “obviously in very different circumstances to others who’ve lost credit insurance.
“We’ve continued to pay on time and to terms,” he added.
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Only a couple of suppliers had withdrawn their support in the immediate wake of the cover being cut, according to the spokesman.
A recent lock-up agreement by Steinhoff creditors to hold on debt claims meant that “in any event” the parent company was “in a stable position for three years,” he said.
His comments came a week after Poundland reported like-for-like sales up 1.7% in the nine months to 30 June. A 5% dip in overall sales was attributed to the closure of around 60 99p Stores - the chain Poundland bought in 2015 and then put into administration after converting the majority to its own fascia.
Rival Poundstretcher also faced tighter insurance terms when credit cover was reduced for its parent Crown Crest Group in March this year. Crown Crest said at the time that the move would have little impact on the business as most suppliers were from Asia and not covered by the insurance policy.
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