S&P: Woolworths to negative

Standard & Poor’s said it revised the outlook on Woolworths Ltd. to negative from stable.

The agency also said it affirmed the A- and A-2 ratings on the company and the group’s related debt issues and programs.

The outlook revision reflects a view that there is at least a one-in-three chance that the A- long-term rating on Woolworths could be lowered to BBB+, S&P said.

A downgrade could occur if the group is unable to restore satisfactory revenue and earnings growth at its core Australian supermarket operations while maintaining fully adjusted debt-to-EBITDA at less than 2.8x, S&P said.

The outlook revision also considers Woolworths’ senior management changes and uncertainties regarding the effectiveness of strategic initiatives currently underway to address weak operating performance, the agency said.

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