OREANDA-NEWS. Fitch Ratings has published a new European food retail dashboard. Fitch expects a further small deterioration in operating margins by the end of 2015 and limited recovery in 2016, despite LFL sales growth providing some support for profit growth.

We have noted improved volumes and sales in 2015, especially for Carrefour and Casino, yet the sector is still faced by competitive pricing tactics amongst the major food retailers. This is still particularly acute in the UK where, nonetheless, Tesco's performance is showing first signs of stabilisation. In addition some retailers' exposure to certain emerging markets may hamper EBIT enhancement.

The publication explores key themes affecting issuer credit profiles for the sector in Europe under the following headings:
- Key theme: Improving sales in core markets but weak operating margins due to price pressure and exposure to certain emerging markets.
- What Fitch is watching: Volumes and sales performance, pricing tactics, EBIT margins, market conditions in higher margin emerging markets and leverage trends.
- The ratings impact of the above.