// Moody’s lowers M&S’s credit rating from stable to negative
// The change follows M&S’s recent trading report, which recorded a decline across clothing & home like-for-like sales
Moody’s has downgraded Marks & Spencer’s credit rating from stable to negative following a strenuous year for the retailer.
The influential credit ratings agency confirmed M&S’s Baa3 senior unsecured ratings and its long-term (P)Baa3 senior unsecured MTN Program rating.
The change to negative comes after M&S’s recent trading report, which recorded a 2.7 per cent decline across clothing and home like-for-like sales over the 13 weeks to December 28.
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Marks & Spencer reported a “disappointing” Christmas trading period despite its food division making a “standout” performance.
The continued decline in like-for-like clothing and home sales reflect the challenges the company is facing to curb the trend of deteriorating underlying profitability, which has fallen each year since peaking in fiscal 2016.
“The negative outlook reflects the risk that the company’s profitability may continue to decline, notwithstanding the strategic efforts to reposition the business for sustainable growth,” Moody’s lead analyst David Beadle said.
“The latest results highlight the challenges in clothing and home even though it is positive to note signs of progress in food, cost control, and the decision last year to reduce dividends.”
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