Fitch downgrades Pick n Pay

Fitch Ratings said it downgraded Pick n Pay Stores Ltd.'s national long-term rating to A(zaf) from A+(zaf) and affirmed its short-term rating at F1(zaf).

The outlook is stable.

The downgrade primarily reflects an expectation that Pick n Pay's weakened credit profile will recover at a slower pace than previously anticipated in 2012 and 2013, Fitch said.

The ratings continue to reflect the group's business profile, including its leading market position in the domestic food retail industry and the diverse range of its product mix, including both branded and private products, the agency said.

However, Fitch said it believes the company's ability to deleverage organically will be constrained by weak free cash flow generation due to high capital expenditure.

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