Black Friday brings retailers little respite as price cuts could shave profits
Black Friday is seen by shoppers as a time to cash in on big discounts. But analysts monitoring debt at Britain’s biggest firms say it will not help many retailers.
Moody’s warned that the price cuts could shave profits and hamper the ability of some retailers to pay back their debts as the woes of high street firms, from dwindling numbers of shoppers to rising business rates, pile up.
‘Black Friday largely brings forward purchases from closer to Christmas, often at lower margins,’ said David Beadle, senior credit officer at Moody’s.
Bleak friday: Moody’s downgraded the debt of several retailers in recent weeks
‘Smart retailers that have chosen to participate do so with a carefully thought out strategy including specific buying to protect margins. Others have decided their overall profitability and brand values are better served by avoiding involvement altogether,’ he added.
Moody’s downgraded the debt of several retailers in recent weeks including Debenhams.
It said last week that it would also reduce the credit rating of fashion chain New Look, explaining that ‘current debt levels are unsustainable’ and that 80 per cent of earnings before interest, depreciations and amortisation in 2019 ‘will be absorbed by interest payments’.