Credit ratings agency Moody’s has downgraded Marks & Spencer’s outlook after the retailer underperformed in the 13 weeks to 28 December.
Moody’s has revised its outlook for M&S’s from stable to negative. It also affirmed the retailer’s Baa3 unsecured ratings and its long-term (P)Baa3 senior unsecured MTN Program rating.
M&S reported a 3.7% year on year dip in UK clothing and home sales for the 13 weeks to 28 December, blaming “underperformance” in menswear and gifting.
David Beadle, Moody’s senior credit officer and lead analyst for M&S, said: “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. 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.”
Although highlighting “signs of progress” from the retailers’ food business, Moody’s found the “size of challenges to turn around the negative trajectory in clothing and home” remain significant.
M&S CEO, Steve Rowe, blamed ”unprecedented discounting” for poor sales over the Christmas period.