The world's third-largest grocery retailer by revenue, with a leading market position in the U.K. grocery market. Despite significant geographic diversification, the U.K. still accounts for around two-thirds of Tesco's retail sales and profits. Challenging trading conditions evidenced by declining market share and profitability, accompanied by topline pressures. Increased competitive pressures in the U.K. from traditional, online, and discount retailers could suppress tangible benefits from management's turnaround plan. Sizable debt after lease and pension adjustments. Robust free cash flow generation, supported by management commitment to reduce capital expenditure (capex). Strong liquidity underpinned by large liquidity resources and long-term debt maturity profile. The negative outlook reflects our view that Tesco will continue to face challenging trading conditions due to high competition
