Asos suppliers have reportedly begun to cut ties with the struggling fashion website following a move by credit insurers to pull cover amid falling profits, in a fresh knock of confidence for the brand.
Leading creditors at Allianz Trade, formerly Euler Hermes, withdrew cover for suppliers last month, according to The Times, due to a challenging economic climate and the company’s poor financial performance.
It followed a move by a separate creditor, Atradius, which also reduced cover in March.
“Lots of suppliers aren’t delivering as insurance has been lost,” one supplier told the outlet.
A separate supplier revealed that he stopped supplying Asos “temporarily” throughout 2023 and does not intend to supply them again until they get credit insurance.
Credit insurance is an important part of the retail ecosystem and protects suppliers from retailers collapsing in between expecting an order and payment.
A spokesperson for Asos told City A.M: “Whilst trade credit insurance cover has been tightening across the retail industry, we have seen no impact on our trading.”
The news of suppliers losing confidence in Asos is the latest in a number of disheartening reports about the online retailer.
In May, the brand swung to a £87.4m loss as shoppers cut back on spending due to the cost of living crisis.
Last month, the brand also engaged in a £75m cash call with shareholders to improve its balance sheet, and was understood to have been approached by a Turkish retailer backed by Chinese e-commerce giant Alibaba for a £1bn takeover.
While the prospect of a takeover improved the brands share price briefly, when markets opened this morning Asos shares tumbled -3.23 per cent.
The company was knocked off the FTSE 250 last Friday after its share price fell to a 12 month low.
City A.M has contacted Allianz Trade for a comment.