Moody's downgrades E-Mart

Moody's Investors Service said it downgraded E-Mart Inc.'s issuer rating to Baa3 from Baa2.

The outlook is stable.

This concludes a review for downgrade that began in February, the agency said.

The downgrades were prompted by an expectation that E-Mart's profitability will weaken further in 2019 because of continued intense competition in the company's core hypermarket business, Moody's said.

Despite the company's de-leveraging measures, its financial leverage will remain elevated, the agency said.

Moody's said it expects E-Mart's adjusted EBIT margin to fall to about the mid-2% range over the next one- to two-years, from 3.4% in 2018.

This is mainly because of sluggish same-store sales growth for its offline stores and ongoing cost pressures, the agency said.

Sluggish same-store sales growth will be caused by intensifying competition with the e-commerce industry, Moody's added.

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