Standard & Poor's lowered Tesco to 'A' from 'A+'

The downgrade reflects the deterioration of Tesco's financial profile below the minimum levels needed to sustain 'A+' ratings as well as the announcement that it will acquire a store portfolio in South Korea for 958 million pounds.

 S&P added the ratings continue to
be supported by Tesco's leading market position and strong operating
performance in the stable, but highly competitive U.K. food retail
market, with good brand recognition and an extensive store network
across the U.K.

The ratings are also underpinned by
some international diversification and Tesco's successful leveraging
of its brand to sell nonfood products.

The negative outlook reflects our
concerns that Tesco will accelerate negative free cash flow through
sustained heavy capital expenditures — about 11 billion pounds in
the past four years and on an upward trend for the future — and will
consequently increase leverage.

Tesco is the biggest retail company in
Britain, las years sales was over 47.3 billiard pound, it is 11%
higher than one year before. Nettó profit grow by 12%. On the
end of this business year company has 3320 units, almost 2,000 from
it in England.