Moody’s cuts House of Fraser, notes to Caa1

Moody's Investors Service said it downgraded House of Fraser (UK & Ireland) Ltd.’s corporate family rating to Caa1 from B3 and probability of default rating to Caa1-PD from B3-PD.

Concurrently, the agency downgraded the rating of the £165 million floating-rate notes due 2020, issued by House of Fraser (Funding) plc, to Caa1 from B3.

The outlook remains negative.

"Our downgrade of HoF reflects its weak results in the first three quarters of its fiscal year have been weak, which was due to both challenging market conditions and company specific factors, notably in respect of disruption after the launch of a new web platform and underperformance in House Brands. The negative trajectory of profitability and resultant deterioration in already weak credit metrics means that a B3 CFR is no longer appropriate," David Beadle, Moody's vice president, senior credit officer and lead analyst for House of Fraser, said in a news release.

"Absent an unexpected general uptick in consumer demand, a recovery in HoF's profitability is dependent upon either an improvement in the company's product offering or in cost savings initiatives, which each involve execution risks."

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