Moody’s: House of Fraser view to negative

Moody's Investors Service said it changed to negative from stable the outlook of House of Fraser (UK & Ireland) Ltd. and House of Fraser (Funding) plc.

The ratings affected include House of Fraser's corporate family rating of B3, probability of default rating of B3-PD and the B3 rating of the £175 million floating-rate notes due 2020 issued by House of Fraser (Funding).

At the same time, the agency affirmed all ratings.

"Despite HoF's positive Christmas 2016 trading update, which points to higher year-on-year profitability in the important last quarter of its fiscal year, we believe the weaker profitability in the first three quarters will result in lower reported EBITDA in the full year to the end of January 2017,” David Beadle, Moody's vice president, senior credit officer and lead analyst for House of Fraser, said in a news release.

“The outlook for consumer sentiment in the UK during 2017 is uncertain as we expect Sterling's ongoing weakness to drive higher costs of imported products and rising inflation . The resultant squeeze on disposable incomes would weigh on discretionary spending. In these circumstances, we believe HoF would find it difficult to recover to previous levels of profitability and therefore its credit metrics would remain weak for the rating category."

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