Efforts to revive struggling fashion chain New Look are in turmoil after suppliers had vital insurance cover blocked

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New Look is battling to revive its fortunes after a £10.4m loss in the six months to September

Turnaround efforts at struggling fashion chain New Look have been thrown into turmoil after suppliers had vital insurance cover blocked.

Major credit insurers are said to be refusing to cover new shipments to the High Street retailer, sparking fresh concerns about its finances.

The cover is seen as standard in the industry and provides suppliers with protection in case the retailer cannot pay its bills.

Euler Hermes is one of the firms that has stopped offering cover on new shipments to New Look and QBE has reduced cover provided.

Their decision was linked with fears about a sales slump at the retailer but also to controversy surrounding the main shareholder in its parent company, South African billionaire Christo Wiese.

The 76-year-old owns about 35 per cent of Brait, the private equity fund that owns New Look, but also has the biggest stake in crisis-hit Steinhoff.

He quit the Steinhoff board last month in the wake of accounting irregularities uncovered at the business, which owns Poundland in the UK.

New Look is already battling to revive its fortunes after booking a £10.4 million loss in the six months to September – compared to a £60 million profit the year before. It has parachuted in former boss Alistair McGeorge, who spearheaded the firm’s overhaul in 2011 before leaving in 2014, and the executive chairman has vowed to take it back to its roots producing clothes with wide appeal.

Former boss Alistair McGeorge said the business had suffered because it had tried to be too ‘young and trendy’

He said the business had suffered because it had tried to be too ‘young and trendy’.

But the denial of insurance to New Look’s suppliers could put yet more strain on its balance sheets. This is because suppliers could demand upfront payments for goods if they cannot get cover for shipments.

A loss of credit insurance was one of several blows dealt to former fashion chain BHS before its collapse in 2016.

The blow to New Look comes just days after rivals sparked separate concerns, with Debenhams issuing a shock profit warning and House of Fraser pleading with landlords to cut its rent bills.

Uncertainty on the High Street has been underlined by a string of results since Christmas that have painted a mixed picture. Although sales at Next, Poundland, John Lewis and Jigsaw over the festive period defied gloomy predictions, dismal sales at Debenhams sent investors running for the hills.

Analysts are predicting more grim news this week from Marks & Spencer, which is expected to report a fall in fashion and furniture sales.

Last night a spokesman for Euler Hermes declined to comment. New Look and QBE did not respond to requests for comment.