S&P says Best Buy unchanged

Standard & Poor's said its ratings on Best Buy Co. Inc. are unchanged at BBB- with a negative outlook following the lowered earnings guidance for the second quarter fiscal 2002.

However, S&P said that continued sluggish sales trends coupled with Best Buy's more aggressive financial policy over the past year could further pressure the ratings and outlook.

The revised earnings guidance is based on softened sales trends in July as a result of declining consumer confidence, S&P noted. Best Buy expects same-store sales to be slightly positive in the second quarter compared with its previous expectations of a 4% to 5% increase.

S&P said that based on the revised earnings guidance credit ratios will remain in line with the ratings.

S&P says Ann Taylor unchanged

Standard & Poor's said Ann Taylor Inc.'s ratings remain unchanged at BB- for the corporate credit rating with a stable outlook after the company raised its second quarter earnings guidance.

S&P said it views the company's results in a very positive light but said the weak and intensely competitive retail environment could challenge the company.

Ann Taylor's operating results in the quarter were driven by stronger than expected sales and margin results in July, with same-store sales increasing 7.4% in that month, S&P noted. Although comparable-store sales declined 0.2% in the second quarter, the company was able to improve gross margins on a year-over-year basis due to strong full-price selling at both divisions.

S&P says Charming Shoppes unchanged

Standard & Poor's said Charming Shoppes Inc.'s ratings remain unchanged at BB- for the corporate credit rating with a stable outlook after the company said comparable-store sales declined 3% in July.

By division, comparable-store sales were down 8% at Lane Bryant stores and 3% at Catherines stores, and were positive 2% at Fashion Bug stores, S&P noted.

Although sales were down, the company was able to improve gross margins on a year-over-year basis due to good inventory management and early sell-through of summer merchandise, S&P said.

Given the weak U.S. retail environment, S&P said it believes it will be difficult for Charming Shoppes to improve its operating performance meaningfully in the near term. Yet S&P said it does not expect any significant deterioration in credit protection measures.

S&P lowers El Paso outlook

Standard & Poor's lowered its outlook on El Paso Corp. to negative from stable and confirmed the company's ratings. Debt affected includes El Paso's senior unsecured rating of BBB, preferred stock rating of BBB- and the BBB+ senior unsecured ratings of Tennessee Gas Pipeline, El Paso Natural Gas, ANR Pipeline, Colorado Interstate Gas and Southern Natural Gas.

S&P said the outlook change is in response to the reduction in projected funds from operations before changes in working capital in 2002 and 2003 to between $2.7 billion to $3 billion from over $3.5 billion and the challenges it faces to produce cash flow credit protection measures commensurate for current ratings.

The reduced cash flow expectations are due primarily to reduced discretionary capital spending in its exploration and production unit and the impact of a persistently weak energy trading and marketing environment on its merchant group, S&P said.

Providing support is the company's plan to reduce capital spending in line with cash flow from operations and sell additional assets to reduce its debt balance even further. Also, the company's more stable asset-based businesses (pipelines, exploration and production, gathering and processing properties) will represent a sizable 85% of the company's total cash flow, S&P added.

Fitch cuts Empresas ICA

Fitch Ratings downgraded Empresas ICA Sociedad Controladora, SA de CV's senior unsecured foreign currency and senior unsecured local currency rating to CC from B, affecting its subordinated convertible debentures due 2004.

Fitch said the downgrade reflects continued limitations on ICA's financial flexibility and credit protection measures, delays in Mexican public sector spending, cancellation and/or postponement of key infrastructure projects, significant reduction in backlog and uncertain regional economic outlook.

The assigned ratings also consider management's commitment to financial discipline, including debt reduction and successful asset divestments, and industrial construction partnership with Fluor Daniel, Fitch said.

A weakening domestic macroeconomic environment, coupled with delays in public spending, continue to pressure ICA's profitability and financial flexibility, Fitch added. Notwithstanding management's proactive efforts to improve the company's cost structure and reduce leverage levels, the current environment in Mexico and Latin America continue to negatively affect ICA's financial performance.

Credit protection measures remain under pressure, as reflected by an EBITDA-to-interest expense ratio of 0.9 times and a total debt-to-EBITDA ratio of 10.7x, Fitch said. Although profitability has improved, it remains at very low levels, with an operating margin of 2% and an EBITDA margin of 7%.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.