Major fears for the future of Myer and David Jones as major insurer refuses to protect their suppliers against bad debts
- QBE decided to exclude Myer and David Jones from its trade insurance product
- It provides protection to suppliers if the department stores are unable to pay
- QBE said Myer and DJ did not have sustainable business models post COVID
- Both Myer and David Jones dismissed QBE’s assessment of their businesses
The future of Myer and David Jones is in doubt after one of Australia’s largest insurers refused to protect their suppliers.
QBE decided to exclude Myer and David Jones from its trade insurance product from July 16.
The product provides financial protection for the department stores’ supplier in case they are unable to cover their debts.
The decision came after the insurer conducted a review into the retail sector and concluded the department stores’ business models were not sustainable in a post-COVID19.
QBE decided to exclude Myer and David Jones from its trade insurance product from July 16
Online shopping has burgeoned since the crisis began and many believe trends won’t return even if a vaccine is developed.
Both retailers dismissed QBE’s assessment and Myer said they were disappointed but they did not believe the insurer ‘provided substantial cover over Myer’s business.’
QBE released a statement regarding their decision on Friday and acknowledged Myer and David Jones had struggled in recent years.
‘While we appreciate this is a difficult time for these two retailers, we believe this is a prudent course of action in the current market conditions,’ the QBE statement said.
‘We have advised both Myer and David Jones of our willingness to continue to review our position as and when further information about market conditions becomes available.’
In Myer’s response, they said payment to suppliers had not changed since the coronavirus pandemic started.
‘We will continue to work with our suppliers in delivering suitable commercial terms with or without trade credit insurance sitting in the middle,’ Myer said.
QBE said David Jones and Myer did not have a sustainable business model in a post pandemic world
David Jones reminded the insurer that they had kept stores open during the coronavirus shutdown and had also worked closely with their suppliers during that time.
‘While insurers have adjusted their risk parameters globally in response to COVID-19 this doesn’t change our focus on delivering for suppliers, our customers and our team for the long term,’ David Jones said.
QBE’s decision comes after the Australian Bureau of Statistics released sales data following an easing of coronavirus restrictions.
The ABS found sales in the retail sector had rebounded quickly with a recorded 16.3 per cent increase, or $28.3billion, in May.
Both retailers dismissed QBE’s assessment of their businesses