Moody's drops Whole Foods

Moody's Investors Service said it lowered Whole Foods Market, Inc.'s ratings following the company's announcement of lower reported earnings for most recent quarter.

Whole Foods' corporate family rating, probability of default, and senior secured bank loan ratings were lowered to Ba3 from Ba2, the agency said, adding that the ratings remain on review for further possible downgrade.

The downgrade considers the negative impact on Whole Foods' leverage which is already considered high for the rating, Moody's noted, stating that debt/EBITDA is currently 6.5 times and could increase further as earnings continue to be pressured by the weak economic environment.

The company's earnings decline was attributed to negative comparable store sales, reduced margins due to customers trading down, and the inability of Whole Foods to pass along cost increases, the agency said.

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