S&P: O'Charley's outlook negative

Standard & Poor's said it revised its outlook on O'Charley's Inc. to negative from stable and affirmed all ratings on the company, including the B+ corporate credit rating.

The agency said the action comes after weaker-than-expected performance in the first quarter marked by a quarter-over-quarter decline in revenue of 6.9% and adjusted EBITDA down 26%, and management guided to sales and profit declines in the second quarter versus the prior year.

Given the intense competition in the restaurant industry and likely sustained high unemployment, S&P said it could foresee these trends continuing in the second half of 2010, which could lead to credit ratios more appropriate for a lower rating category.

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