Credit crunch hits high street; Insurers flee Woolworths
by David Masters
The turmoil in financial markets has hit the high street with insurers refusing cover to cash-strapped chain store Woolworths.
France-based insurer Coface is now the third and last major credit insurer to withdraw cover from Woolworth’s suppliers, following the lead of Euler Hermes and Atradius.
Being refused credit insurance is likely to have a significant affect on Woolworth’s supply chain with suppliers likely to request payment before they ship goods rather than after the goods have been sold.
Woolworths may also fear that suppliers reject them completely, forcing the company to restructure its supply chain in the crucial run up to Christmas.
The company also revealed this week that it will be cancelling its direct debit payment of business rates to improve speculation.
This led investors to fear that the company may be struggling more than it is letting on, causing share prices to fall 16%.