First Quench refuses to comment on credit insurance

First Quench Retailing has declined to comment on a leading Continental wine producer being refused credit insurance on an order. The parent company of the Threshers, The Local, Wine Rack and Haddow’s off licence chains, owned by private equity house Vision Capital, is Britain’s largest independent high street drinks retailer.

The producer sought credit insurance on a shipment to First Quench from Coface, which is 98% owned by Natixis, the French banking group, but cover was declined due to the low credit rating the insurer had given to First Quench. Coface claims it has a risk assessment database covering more than 44 million companies worldwide and says that it obtains “data from several hundred public and private sources”, which is used “to manage each company’s rating and Coface’s risk exposure on a continuous basis”.
 
First Quench refused to discuss whether it had approached Coface to seek a review of its credit rating, saying the insurance refusal was a “matter between the credit insurer and the supplier”. In a separate statement a First Quench spokesman said the group had “no debt and substantial levels of cash in the business” and that it continued to “perform well relative to the [off licence] sector.” The spokesman also said that strong relationships developed over a long time “have built trust between First Quench Retailing and our suppliers. This reassures suppliers in an environment where credit insurers are reviewing cover.”

Separately, the group is in dispute with landlords as it seeks to renegotiate the rents for its high street shops. It wants to switch from the long-established pattern of paying three months in advance to a system of monthly rental payment. First Quench says this is part of a campaign being waged by the British Retail Consortium and supported by the Wine and Spirit Trade Association. “Monthly payments,” the company said, “are a more viable option for retailers … particularly during tougher conditions where cash flow can be more limited.”

It is also believed that First Quench is in the process of closing up to 400 outlets, although the company will not confirm or deny the number. It says that as part of a “strategic update” announced in March 2008, it is shutting “loss-making stores, as any sensible retailer would do, to improve company performance and focus on the profitable majority during these recessionary times”. The number of stores to be closed, a spokesman said, “is dependent upon our capacity to reach suitable agreements with landlords.”

Ron Emler, 11.02.09