S&P puts Linens 'n Things on watch

Standard & Poor's said it placed its ratings on Linens 'n Things Inc., including its B corporate credit rating, on CreditWatch with negative implications.

This rating action is based on weaker-than-expected third-quarter earnings and S&P's expectation that Linens 'n Things will be challenged to achieve the credit measures we had previously anticipated.

While comparable-store sales trends recovered in the past two quarters from negative levels, operating results remain weak with comparable-store sales increasing just 0.2% in the third quarter, contrasted with a 10% decline a year ago, the agency noted.

Adjusted EBITDA decreased to $21.3 million from $30.6 million last year due to increased expenses related to new stores and higher freight costs, S&P added.

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