Moody’s drops Woolworths’ credit rating
Moody’s Investor Services has today dropped Woolworths’ credit rating.
Woolworths’ credit rating has been reduced from Baa2 to Baa1 with Moody’s Vice President Ian Chitterer saying the decision reflects the challenges the group is facing.
“The trend in comparable-store sales growth at its core Australian Food and Liquor business has been negative for the past three quarters and Woolworths does not expect a significant improvement in the 2H2016,” Chitterer said.
“The 1HFY2016 result highlights the loss in market share and margin erosion in the Supermarket business, only partially offset by the continued strong performance in Liquor,” he said.
Moody’s stated for Woolworths rating to improve actions need to occur including increased performance from its food and liquor investments across a sustained period.
“Given the negative outlook, a rating upgrade in the next 12 – 18 months is not likely,” Moody’s said.
The credit rating comes after Woolworths revealed on 26 February 2016 that its net profit after tax for the six months ended 3 January 2016 was AUD$925.8 million. This was a 33.1 per cent drop on the corresponding period in 2015.
At the time of the announcement Chairman Gordan Cairns said it would be three to five years before the group could be turned back around.