Fitch affirms Macy's

Fitch Ratings said it affirmed the long-term issuer default rating for Macy's, Inc. at BBB- and Macy's Retail Holdings, Inc.'s long-term issuer default rating at BBB-, $2 billion bank credit facility at BBB-, senior unsecured notes and debentures at BBB- and short term issuer default rating at F3.

The outlook was revised to negative from stable.

Ratings reflect Macy's strong market share in the department store sector and strong liquidity position, including its ability to generate strong free cash flow despite a challenging operating environment, the agency said.

These strengths are balanced against the significant deceleration in comparable store sales from weak discretionary consumer spending and a heightened promotional retail environment, which are pressuring operating margins and have resulted in weakened credit metrics, Fitch said.

Fitch said it expects leverage ratios to rise to more than 4 times given the weakness in discretionary spending and resulting pressure on operating margins.

Macy's leverage was 3.66x as of Jan. 31.

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