...Recent results of two of the UK's largest retailers reflect the competitive pressures they face, but also their respective strategies to address these challenges and financial flexibility that supports their investment-grade ratings. Marks & Spencer's (M&S, BBB-/Stable) results for the year to end-March 2019, published today, highlight structural challenges facing the retailing sector in the UK, such as the need to manage selling space in general merchandise, invest in customer outreach, including online, and compete effectively. Despite high competitive pressures, the company's adequate financial flexibility and stable credit metrics supports rating levels. Tesco (BBB-/Stable) has delivered the strongest margin growth in the last financial year among its closest-rated peer group, generating stronger free cash flow (FCF) and improving financial headroom under its rating. M&S, with its large exposure to clothing sales, has somewhat different and more intense competitive pressures than Tesco....
