Morrisons’ credit rating downgraded by Moody’s

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Morrisons’ credit rating has been downgraded by Moody’s following poor sales and profits.

Morrisons

Moody’s has downgraded Morrisons’ credit rating

The credit rating agency downgraded Morrisons amid fears over its ability to repay debts of £7.5bn, The Guardian reported.

Moody’s switched Morrisons from a B1 to a B2 rating in response to factors such as an “aggressive financial strategy, high leverage and private equity ownership”.

The agency also observed that Morrisons has been hit by a fall in sales alongside increased costs, such as energy and wages.

The downgrade followed Morrisons’ report of a slump in full-year profits and sales for the 52 weeks to October 30, 2022, which the retailer attributed to “a continuing sense of uncertainty in consumer sentiment”.

Morrisons’ debts are 9.1 times underlying profits, compared with the credit rating agency’s expectation of 6.5 times.

Moody’s report posted a negative outlook for Morrisons despite the 2.5% boost in sales for the grocer over the Christmas period, excluding fuel.

The Moody’s report, which was published on Tuesday, said it took into consideration Morrisons’ “relatively smaller scale and greater loss of market share to the discounters during the first half of fiscal 2022 compared to the other three ‘big four’ UK grocers”.

Morrisons declined to comment.