Ratings agency Fitch has affirmed its BBB rating and “negative” outlook on Marks & Spencer.

BBB is an “investment grade” rating that indicates “relatively low to moderate credit risk” as opposed to “speculative”, which signals “a higher level of credit risk or that a default has already occurred”.

Fitch said that the retailer has acted to “preserve its credit profile” by cutting capital expenditure, reducing its dividend and bringing down costs. But the agency observed that the ratio of lease-adjusted net debt to EBITDAR is likely to remain unchanged or edge up in the medium term.

The agency said: “Key challenges include management’s ability to manage costs given the present environment of competitor discounting and the pound weakening against the euro and other currencies, while sustaining Marks & Spencer’s market share in food and general merchandise.

“Marks & Spencer’s ratings continue to reflect its strong brand name, leading market positions in most clothing categories, loyal customer base and niche position in the UK food sector.”

Marks & Spencer will issue a second-quarter trading update at the end of the month.