Moody's upgrades Container Store

Moody's Investors Service said it upgraded Container Store, Inc.'s corporate family rating to B2 from B3 and probability of default rating to B2-PD from B3-PD and moved the ratings to its parent holding company, Container Store Group, Inc. The rating on the company's secured term loan due 2019 was upgraded to B2 (LGD4, 50%) from B3 (LGD4, 50%), the agency assigned an SGL-3 speculative grade liquidity rating, and the outlook is stable.

The agency said the upgrade reflects the company's improved debt-protection metrics following the recent repayment of a portion of its secured term loan using proceeds from its initial public offering, which was completed on Oct. 31, and the company's continued solid operating performance as a result of profitable unit growth and positive same-store sales.

Container Store's B2 corporate family rating reflects its continued high debt load and weak credit metrics despite recent improvement, small scale and limited product focus relative to other global retailers, relatively discretionary product offering and moderate seasonality, Moody's said.

The rating is supported by the company's solid market position in the narrowly defined storage and organization category of specialty retail, its recognized brand name and demonstrated ability to maintain solid gross profit margins through economic cycles, largely due to the sizeable offering of exclusive/proprietary products, highly trained sales force and a more affluent customer base, Moody's said.

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