U.K.-based retailer Tesco PLC has reported a greater decline than we anticipated in its like-for-like sales in the U.K., and lower profitability across its retail operations. Despite management's efforts to address competitive pressures, we believe that Tesco will find it difficult to sustainably reverse the negative market and operating trends that are adversely affecting its sales and profitability. We are therefore revising our outlook on Tesco to negative from stable and affirming our 'BBB+/A-2' long- and short-term corporate credit ratings on the group. The negative outlook reflects our view that persistent competitive pressures and declining profitability could undermine Tesco's market position and weaken its credit metrics beyond the levels we consider adequate for the current ratings. A continued decline in
