1st Apr 2020 15:27
(Alliance News) - Moody's Investors Service on Tuesday placed Next PLC's rating under review for a downgrade amid Covid-19 uncertainty.
The ratings agency currently rates the retailer's long-term issuer rating at Baa2.
All Next stores are closed, due to lockdown measures imposed by the UK government to contain the spread of the deadly virus. Its online offering is also closed.
Moody's said: "Beyond this uncertain timeframe demand for clothing and homewares is also likely to be adversely affected by consumer concerns about how the economic downturn will affect their income. Although Moody's expects the company to successfully navigate through the weeks and months ahead, there can be no certainty at this stage as to how long store closures persist or how quickly demand recovers."
Moody's also said it was concerned by Next's distributions policy.
"Moody's believes that Next may be able to return to credit metrics commensurate with its current ratings during the course of 2021. However, in addition to downside risks in respect of the timing, shape and certainty of a return to pre-crisis levels of demand, the rating agency notes that Next may choose to return to historic levels of shareholder distributions from a more leveraged position, which would constrain its ability to return to pre-crisis credit metrics."
Shares in the company were down 8.8% at 3,715.54 pence each in London on Wednesday afternoon.
By Eric Cunha; [email protected]
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