Dixons is denying reports that it is looking to secure alternative trading terms with several large electronics suppliers, among them Samsung, after credit insurance firm Atradius reduced its credit insurance risk cover across the retail sector, including cover on stock sold to the consumer electronics retail giant. Updated: 12 November 2008, 08:52.

The decision could potentially threaten Dixons and Currys stores abilities to stock their shelves this Christmas, meaning that in some cases they may have to buy stock up front.

Atradius' decision comes just weeks after Dixons reported a sales slump of 7 percent for the first six months of the year. Atradius reduced cover from the Dixons group as part of a wide-ranging review of UK retail, which also saw high street giant Woolworths and JJB Sports taken off its books.

The reduction of cover from Atradius means vendors that insure through the company, among them Korean giant Samsung, have no guarantees that outstanding debt with the retailer will be met. In order to avoid being left without stock during the run up to Christmas, Dixons is now understood to be working to secure alternative trading terms with suppliers affected by the decision - although the company says that its suppliers 'still have access to credit insurance'.

A spokesman for DSG told PC Advisor: "Atradius is only one provider of credit insurance in the market. Whilst it is true Atradius have reduced, but not withdrawn, credit insurance across the retail sector, this is not a DSG-specific issue. This is more about Atradius and how it manages its business.

"Our suppliers still have access to credit insurance, they continue to supply us and there have been no changes to our terms with suppliers."

And a spokeswoman for El-giganten, a Dixons group subsidiary in Scandinavia, confirmed that the company was currently in discussion with suppliers. In some cases the company has taken to paying for stock up-front. She added that the situation would be resolved "without any noticeable effect on our stores".

Atradius declined to comment on any specific cases, but did confirm that it had recently reviewed its exposure in electronics retail and that "some" companies were no longer covered.

"Times in general are tougher today. Home electronics is just the type of product that gets hit hard and quickly by the financial slowdown. We are reviewing our exposure in the sector, pulling back in some cases and withdrawing credit in other. But that doesn't mean we're moving away from the sector," said Magnus Lindgren, managing director of Atradius Sweden.

Atradius is one of the world's top-three credit insurers. Its main competitors, Coface and Euler Hermes, both declined to comment on their trading relationship with the Dixons group.

Like other electronics retailers, Dixons is feeling the squeeze of the global financial downturn. Two weeks ago, the group reported a profits slump of 7 percent for the first six months of the year and warned of further tough times ahead. The group has lost 80 percent of its stock value during the past 12 months.

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