Cape Town – A UK fashion brand controlled by SA billionaire Christo Wiese’s investment company Brait [JSE:BAT] has been dealt a blow after an insurer cut cover for its suppliers, according to weekend reports in the British press.
New Look is a retail fashion chain that sells clothes, shoes and accessories, mainly for the under-35 “value fashion” market.
It has 596 brick and mortar stores in the UK, and another 300 internationally, as well as an e-commerce arm.
The Guardian reported on Monday that credit insurer Euler Hermes is understood to have halted the sale of protection against insolvency to the fashion retailer’s suppliers.
The Times, meanwhile, reported over the weekend that another insurer had reduced the coverage levels it was offering to New Look’s suppliers, but not withdrawn them completely.
New Look declined a Fin24 request for comment.
In December ratings agency Moody’s downgraded New Look’s credit rating.
“Our decision to downgrade New Look’s ratings reflects our expectations that, after a particularly weak second quarter, results in the second half of the company’s fiscal year will also fall well short of last year,” said Moody’s on December 8.
“Following changes to the senior management team, New Look is seeking to refocus on its historic value-based broad appeal. However, this strategy will take time, and the path towards a meaningful recovery in profitability is uncertain.”
The Brait connection
The investment vehicle Brait, which is dual listed on the Euro MTF Market of the Luxembourg Stock Exchange and the JSE, owns 81% of New Look’s shares, according recent filings.
Wiese, in turn, owns 34.6% of Brait’s stock, according to the group’s 2018 interim audited results.
Wiese in December resigned as chair and interim CEO of Steinhoff, following the precipitous decline in the Stellenbosch-headquartered retailer’s share price amid an accounting scandal.
Brait shares were on Monday down 5.7%, at R42.06 a share, at the close of the JSE.
In addition to New Look, Brait’s other major investments include Virgin Active, Iceland Foods, and SA food company Premier.
* Sign up to Fin24’s top news in your inbox: SUBSCRIBE TO FIN24 NEWSLETTER