Credit insurers show confidence in ASOS by reinstating cover

Credit insurers Atradius and Coface have reinstated cover for ASOS’ clothing suppliers, signalling renewed confidence in the retailer’s financial stability.

The insurers resumed cover in January after withdrawing it in 2023 due to concerns over ASOS’ declining profits, The Times reported.

Meanwhile, credit insurer Cartan Trade has begun offering cover for the first time.

Allianz Trade remains the only major firm yet to reinstate its cover, having fully withdrawn it two years ago.

Credit insurance safeguards suppliers against the risk of non-payment, ensuring they still receive funds even if a buyer goes bankrupt. In some cases, losing this cover can result in empty shelves and warehouses, risking detrimental consequences for retailers.

An ASOS shareholder said: "This is another positive sign that the turnaround is working after the recent refinancing and old inventory being substantially reduced over the past year."

The move comes as ASOS continues its turnaround efforts after a challenging period.

In November, the retailer reported a pre-tax loss of £379.3 million for the year ending 1 September, widening from a £296.7 million loss the previous year.

ASOS has also faced growing competition from budget-friendly rivals such as Shein, Temu, and Vinted.

José Antonio Ramos Calamonte, who has led ASOS as chief executive since 2022, has been driving the company’s turnaround by reducing inventory, cutting discounts, and adopting a test-and-react model.

In November, he maintained that the "medicinal" measures taken over the past two years were starting to deliver results. When ASOS first launched its turnaround plan, stock levels had surged to over £1 billion due to Covid-related disruptions and ineffective commercial practices. Since then, the retailer has halved its inventory to £520 million.

Strengthening its balance sheet further, ASOS announced a £250 million bond refinancing last summer, along with the £135 million sale of its majority stake in Topshop to Bestseller, the fashion group owned by ASOS shareholder Anders Povlsen. The retailer also revealed plans to close its US warehouse in Georgia and its Lichfield site in Staffordshire, UK.