S&P cuts 5 retailers; Macy's, JC Penney now junk
Apr 17, 2009
NEW YORK, April 16 (Reuters) - Standard & Poor's on Thursday cut its ratings on five U.S. retailers, and sent Macy's Inc (M.N) and J.C. Penney Co (JCP.N) into junk territory, citing concerns over the impact of the U.S. slowdown on department store sales.
Macy's and J.C. Penney were both cut two notches to BB, two steps below investment grade, from BBB-minus, the lowest investment-grade rating.
Neiman Marcus Group Inc NMRCUS.UL was also cut one notch to B, five steps below investment grade, from B-plus while Dillard's Inc (DDS.N) was cut two notches from the same level to B-minus.
Nordstrom Inc (JWN.N) was also cut one step to BBB-plus, the third lowest investment grade, from A-minus.
"The recession is likely to last through at least the third quarter of 2009 given weakening employment, the still poor housing market and continuing turmoil in financial markets," S&P said in a statement.
"We believe lower consumer spending and declining mall traffic will affect the sales and profits of the department store operators this year, and that recovery will be slow and dependent on an improvement in the macroenvironment," S&P said.
The outlook for all retailers except for Neiman Marcus is stable, indicating an additional rating change is not expected over the next one to two years. Neiman Marcus has a negative outlook, indicating a downgrade may be more likely in this time frame.
S&P also affirmed its rating on Sears Holdings Corp (SHLD.O) at BB-minus, three steps below investment grade, and gave the company a negative ratings outlook.
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