Moody's has Tuesday downgraded the credit rating of Morrisons after the retailer reported decline in sales and profits.
The credit ratings agency has changed the outlook for Morrisons’ ability to repay its debts to negative from stable, while downgrading the credit rating by one notch, from B1 to B2, indicating higher risk.
The downgrade was triggered by the company's operating underperformance in fiscal 2022 and resultant weak credit metrics. The retailer’s debts now stand at 9.1 times underlying profits, and Moody's said it anticipates that over the next 12-18 months, the leverage will remain significantly above its expectation of below 6.5 times.
Morrisons generated revenue of £18.5 billion in the last twelve months period ended 30 October 2022, of which £4.0 billion were fuel sales, but the like-for-like year on year sales, excluding fuel, fell by 4.2 per cent.
However, announcing its results late last month, the supermarket has forecasted a return to earnings growth this year as a push to improve its price competitiveness starts to win back shoppers battling an escalating cost-of-living crisis.
