Credit rating agency Moody's has announced that it has downgraded the rating of leading UK grocery retailer Tesco in the wake of its full-year 2011 results announcement, in which CEO Philip Clarke revealed a £1bn (€1.2bn) investment to help boost its UK business.
According to Moody's, it downgraded Tesco's long-term unsecured rating by one notch, from A3 to Baa1, raising concerns that the planned €1.2bn investment will hit profits.
Moody's senior analyst Yasmina Serghini-Douvin said that the action reflected the belief that it will take time for Tesco's investment to pay off in the UK, CBS News reported.
In its full-year results, Tesco saw overall profit and sales growth of 5.3 per cent to €4.6bn and 7.4 per cent to €84.3bn respectively, driven by international performance – although its home market in the UK saw profit fall 1 per cent to €3bn.
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