In recent days senior executives of QBE Insurance who provide credit insurance to vendors have been contacting retailers to assess their performance. In some cases they have insisted on seeing the balance sheets of retailers as well as their cash flow position.
A senior executive of QBE Insurance Paul Shirdon said "We act for vendors in assessing risk. We payout on liquidation or if a Company has been placed into administration. We do not payout for late payments. Currently we are assessing the viability of several retailers in the consumer technology and appliance market this is at the request of vendors who may be exposed. We are setting credit limits and in some cases and after a review adjusting credit limits".
"In a downturn market like we are now witnessing we have to be particularly vigilant. We have already earmarked some that may be in trouble".
When asked about the health and credit exposure for Clive Peeters and several Retravision stores he said "We cannot comment about individual retailers. We are aware of Clive Peeters share slide and yes we have spoken to them".
He added" We check balance sheets and cashflow and where necessary make adjustments. Currently we are reporting back to vendors on a weekly and monthly basis".
Richard Uechtritz the CEO of JB Hi Fi said "We have been contacted this week by QBE insurance who are basically are doing credit checks of retailers. They are under pressure from vendors who are now concerned over the credit position of certain retailers."
Overseas the Korean Times is reporting that Samsung Electronics is considering cutting its supplier-vendor relationship with Circuit City Stores, the No. 2 electronics chain in the United States, after the retailer filed for Chapter 11 bankruptcy protection. The Korean Company is owed over $116 million. In Australia, Company insiders have admitted that they are watching closely the performance of several retail stores following the collapse of several stores during the past 12 months.
"Despite aggressive efforts to talk to its vendors, it is highly unlikely that Samsung will continue its tie-up with Circuit City as the possibility is very high that Circuit City will eventually file for court receivership," a high-ranking industry source told The Korea Times.
The get tough edict comes as the share value of major retailers in Australia crash. Clive Peeters has fallen 94% in the past 12 months JB Hi Fi 35% and Harvey Norman 56%.
