Britain’s lockdown in the face of the coronavirus has dented the prestige of one of the country’s most recognizable retailing brands.
Standard & Poor’s Global Ratings cut Marks & Spencer Group Plc’s credit score to junk on Thursday, raising the possibility a major cultural icon will pay higher interest to lenders less sure they’ll get their money back.
S&P said it expects the coronavirus to result in materially lower sales for the firm’s core clothing and home divisions, only partially mitigated by online and food sales. It also warned it could reduce the rating further if the U.K. lockdown continues into the second half of 2020.
M&S issued a profit warning earlier this month as the coronavirus started to tighten its grip in Europe. Britain’s retail industry was already on the ropes before the pandemic hit, losing market share to online sellers.
The company’s 250 million pounds ($299 million) of bonds maturing due 2027 are currently quoted more than 10% below their face value having traded at par as recently as Mar. 9.
So far this year 11 firms globally have lost their investment grade credit ratings, putting them in a category of so-called fallen angels, according to S&P.
©2020 Bloomberg L.P.