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Weak Consumer Spending Clouds European Retailers' Credit Outlook Feb 12
Standard & Poors, Feb 2012
Abstract
European retailers' trading results for year-end 2011 confirmed what many high streets had already suspected: that slowing economies in Europe are increasingly weighing on consumer spending and denting the industry's earnings. Most of the European retailers we rate recorded like-for-like sales down between 0% and negative 5% for the fourth quarter of 2011 (see charts 1 and 2). Companies that managed to expand sales in their home markets generally did so through discounting, in our view--a trend that, if it persists, could substantially erode retailers' profitability in the future. We anticipate that consumer spending and sales volumes will stay weak through 2012 given our forecast of a mild recession in Europe in the first half of the year alongside high...
Companies mentioned in this report are: Casino Guichard - Perrachon & Cie S.A.,Carrefour S.A.,Tesco PLC,Delhaize Group S.A.,Missouri TopCo Ltd.,Co-operative Group Ltd.,Phones4u Finance PLC
Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.
Research Type: Commentary
Criteria articles describe the thought process and methodology Standard & Poor's analysts use in determining ratings. These commentary pieces discuss both the quantitative (economic and financial) and qualitative (business analysis and caliber of management) aspects of the analysis, as well as legal issues.
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