Every little hurts: Tesco downgraded by Moody's

Moody’s has cut Tesco’s rating, giving it only two grades above “junk status”.

The supermarket giant saw its ratings reduced to Baa2 from Baa1.

The news comes after Tesco revealed a third successive quarter of sales falls across the UK. Earlier this month, Tesco reported a 3.8% drop in like-for-like sales in the UK in the last quarter.

Moody’s also warned Tesco of tough conditions over the next 12 to 18 months.

Sven Reinke, senior analyst at Moody’s, said: “We have downgraded Tesco’s rating owing to the increasingly difficult conditions in the UK retail grocery market, which contributed to a 6 per cent drop in the group’s 2013-14 trading profit and weak first quarter of fiscal 2014-15 sales results.

“We expect these conditions to continue affecting the company’s credit profile negatively over the next 12-18 months.”

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