...Divergent Credit Profiles: The European food retail sector has been under pressure since the mid-2000s due to lacklustre economic conditions and changes in consumer spending patterns. The degree of success of the transformation plans launched to face these challenges drive the current divergence in food retailers' credit profiles. Carrefour's successful adjustment drove its IDR upgrade to 'BBB+' in 2015. In contrast, Tesco's IDR of 'BB+' reflects a more impaired business risk profile in light of fast-changing market conditions. Convenience, E-commerce Drive Growth: Adapting to new consumer habits includes the shift towards an omni-channel model, including the development of e-commerce and convenience sales. Food retailers are still looking for the right e-commerce business model. Online activities support revenue growth, but their profitability remains questionable. Fitch expects no meaningful EBIT contribution from them in the medium term. Lower Profitability: 2014 marked a turning point...
