Morrisons’ credit rating has been downgraded after reporting a drop in its sales and profits performance.
The retailer’s credit rating agency, Moody’s, said Morrisons’ ability to repay its £7.5 billion of debts had switched to negative from stable, indicating far higher risk.
The downgrade was triggered by lower than expected profits for 2022, as revealed in figures published by Morrisons last month.
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Moody’s cited an “aggressive financial strategy, high leverage” and private equity ownership, with concerns about “operating underperformance” amid rising energy costs.
The grocer, which lost its position as the UK’s fourth-largest supermarket to Aldi last year, said underlying profits fell 15% to £828m in the year ending 30 October.
Despite annual food inflation rising to 13.3% in December, revenues for Morrisons were still down.
That was not all however, as Moody’s said the outlook increases the chances for Morrisons to see further downgrades in future.
It comes as former Aldi UK boss, Matthew Barnes, is tipped replace David Potts as Morrisons next CEO – following news that Tesco UK CEO Jason Tarry could also be a potential replacement for the role.
