In contrast to the criticism supermarket group Woolworths has garnered recently for its attempts to further narrow competition in the Australian grocery sector with the purchase of 80 Franklin’s stores, the international ratings agency Standard & Poor’s has commended the chain’s “very strong and highly defensible position.”
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The agency further congratulated Woolworth’s well-executed retail strategy and assigned a A-rating. Executive Paul Draffin commented: “This very strong business profile mitigates its moderately aggressive financial policy, which is underpinned by its extensive use of operating leases to finance its store network, its shareholder-oriented capital management policies and its debt-funded acquisition and capital return program of up to A$1bn in the next two years.”
“Importantly, supermarket sales are largely recession resistant, which underpins Woolworth’s stable earnings performance,” he added.
In light of A&P’s comments, share in the company rose 27c to A$9.82.
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