Research Update: Tesco Upgraded To 'BBB-' On Strong Performance and Deleveraging; Outlook Stable

U.K.-based retailer Tesco PLC's operating results have improved consistently in recent quarters, while credit metrics also benefitted from a reduction in financial debt and lease and pension liabilities in the first half of the financial year (FY) ending Feb. 28, 2020. In our view, Tesco has fared better than its competitors over the past 18 months in a challenging U.K. retail market, which has been affected by a deterioration in the economic environment, continued very stiff price competition, and Brexit-related uncertainties. We expect that Tesco will continue expanding its earnings, profitability, and cash generation over the medium term, supported by steady customer demand and by the improved efficiency of its operations, as a result of the recently completed comprehensive turnaround

...- U.K.-based retailer Tesco PLC's operating results have improved consistently in recent quarters, while credit metrics also benefitted from a reduction in financial debt and lease and pension liabilities in the first half of the financial year (FY) ending Feb. 28, 2020. - In our view, Tesco has fared better than its competitors over the past 18 months in a challenging U.K. retail market, which has been affected by a deterioration in the economic environment, continued very stiff price competition, and Brexit-related uncertainties. - We expect that Tesco will continue expanding its earnings, profitability, and cash generation over the medium term, supported by steady customer demand and by the improved efficiency of its operations, as a result of the recently completed comprehensive turnaround plan. - We are therefore raising the long- and short-term issuer credit ratings on Tesco to '###-/A-3' from '##+/B' and the issue ratings on its senior unsecured debt to '###-' from '##+'. - The stable...

Research Update