Another rating agency has warned of a potential cut to Tesco's credit rating.
Standard & Poor (S&P) changed its outlook on Tesco's debt from stable to negative - a move that indicates the supermarket is more likely to have its rating cut than raised, according to The Guardian.
'The outlook revision reflects a greater decline in Tesco's like-for-like sales in the UK than we anticipated, and lower profitability across its retail operations,' S&P analyst Raam Ratnam told the news outlet.
'In our opinion, the declining profitability and difficult trading conditions could undermine Tesco's competitive position and weaken its credit metrics to lower levels than we consider adequate for the current ratings. In our view, market conditions will remain highly competitive, particularly in the UK, which accounts for around 70 per cent of Tesco's retail sales and profits.'
The change of stance folllows in the footsteps of fellow ratings agency Moody's, which on Friday warned it was considering cutting the supermarket chain's credit rating for a second time.
Earlier this month Tesco reported a 6 per cent decline in group profits to £3.3 billion as both its domestic and overseas chains came under pressure. The fall in profits was accompanied by £1.3bn of writedowns on the value of its European and Chinese operations.
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