Fitch lowers Supervalu

Fitch Ratings said it downgraded the issuer default rating on Supervalu Inc. and its subsidiaries to CCC from B.

The agency also downgraded the rating on the company's $1.5 billion bank facilities to B with a recovery rating of RR2 from BB- with a recovery rating of RR2, its term loan B to B with a recovery rating of RR2 from BB-with a recovery rating of RR2 and its senior unsecured notes to CCC with a recovery rating of RR4 from B with a recovery rating of RR4.

Also downgraded includes New Albertson's, Inc.'s issuer default rating to CCC from B and senior unsecured notes to CCC with a recovery rating of RR4 from B with a recovery rating of RR4.

The agency also downgraded American Stores Co., LLC's issuer default rating to CCC from B and senior unsecured notes to B- with a recovery rating of RR3 from B+ with a recovery rating of RR3.

The downgrade reflects the company's deteriorating operating results, indicating that its strategy of making gradual price investments to become more competitive is not gaining traction, Fitch said.

Fitch also said it sees additional execution risk associated with the company's revised strategy that calls for more aggressive price investments, as they may not yield higher sales volumes.

There also is the potential for higher financial leverage should the company be sold, the agency said.

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