S&P downgrades Parkson Retail

S&P said it lowered the long-term corporate credit rating on Parkson Retail Group Ltd. to B- from B, along with its long-term Greater China regional scale rating to cnB from cnB+.

The outlook is stable.

The downgrades were due to an expectation that Parkson's profitability will remain weak and its leverage will stay high over the next 12 months amid the challenging retail market in China and the company's slow turnaround of its lossmaking stores, S&P said.

The agency said it also expects Parkson's operating performance to remain weak due to intensifying competition and rising labor costs, which will continue to undermine the company's margins.

While Parkson has been accelerating its strategic transformation with increasing direct sales and introduction of lifestyle concepts, S&P said it sees limited benefits at this stage.

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