S&P cuts Tesco outlook to negative on profit fears

Standard & Poor's has cut its outlook on Tesco to negative in the belief declining profitability may force it to cut the UK retailer's credit rating in future.

Tesco's performance will "continue to be dampened" by weak consumer spending in the UK, S&P said, adding that competition pressures in the UK may more than offset the benefits of the retailer's global diversification. The ratings agency suggested Tesco's efforts to improve its standing among customers could hit margins in future. "We believe that the commitment by Tesco management to invest in improving customer service and experience levels in its UK stores will also negatively affect its trading margins," S&P said in a statement. Last month, Tesco revealed that like-for-like sale...