S&P revises its outlook on Tesco to negative from stable, citing difficult industry conditions, trend of weakening profitability, low top-line growth

Cindy Allen

NEW YORK , August 1, 2012 (press release) – Overview

-- We believe that in light of currently difficult industry conditions, a trend of weakening profitability and low top-line growth will continue for U.K.-based retailer Tesco PLC.

-- The decline in Tesco's profitability and difficulties in protecting its U.K. market share, in particular, could in our view lead to a deterioration in its business risk profile.

-- We are revising our outlook on Tesco to negative from stable and affirming our 'A-/A-2' corporate credit ratings on the company.

-- The negative outlook reflects our view that declining profitability and difficult trading conditions could dilute its credit metrics beyond the levels we consider adequate for the current ratings.

Rating Action

On July 31, 2012, Standard & Poor's Ratings Services revised its outlook on U.K.-based Tesco PLC (Tesco) to negative from stable. At the same time, we affirmed our 'A-/A-2' long- and short-term corporate credit ratings on Tesco.

* All content is copyrighted by Industry Intelligence, or the original respective author or source. You may not recirculate, redistrubte or publish the analysis and presentation included in the service without Industry Intelligence's prior written consent. Please review our terms of use.