Bed retailer Dreams has today brushed aside concerns that the firm is in trouble despite one of its supplier insurance companies suspending cover.
Credit insurance & credit management group Euler Hermes issued a notice to its clients this weekend saying that it will no longer be insuring sales to the bed specialist, often a sign that there are worries about a business’s sustainability, but Dreams confirmed that the decision only affects a small part of its retail operation.
A spokesperson for the retailer told Retail Gazette that 40 per cent of product supplies are manufactured by Dreams’ own facilities, 20 per cent are from the Far East and do not use companies such as Euler, whilst another 20 per cent are self-insured.
“Of the remaining 20 per cent, a tiny handful of suppliers have been let down by Euler and had their cover withdrawn,” she added.
“However, they intend to keep supplying Dreams as you would expect them to want to do given Dreams’ healthy profitably, strong backing and rapidly growing, leading market share.
“The potential as yet unrealised impact of this tiny number of suppliers having issues relating to last week’s actions by Euler are de minimis to the point of irrelevancy.”
Dreams has around 250 stores across the UK and was sold to private equity firm Exponent in 2008 for around £222 million.
In 2009/10 operating profits were up 36 per cent year-on-year to £18.4 million, but profits fell to around £4 million during the last 12-month fiscal period as consumers became less willing to part with their money for big ticket items.
Commenting on its withdrawal of cover to Dreams suppliers, Euler Hermes said today: “This will not take effect for thirty days and so goods/services supplied within that period will still be insured as per current policy terms.
“This delay will give our clients time to review their position and make alternative arrangements as appropriate. We will maintain an ongoing dialogue with Dreams and we will regularly review our position.”