S&P drops Saks

Standard & Poor's said it lowered its ratings on Saks Inc. to B- from B.

The outlook is negative.

"The rating change reflects its belief that the company will be more challenged than previously expected by the current recession in the U.S. and the turmoil in the financial markets," said S&P credit analyst Diane Shand.

Credit metrics deteriorated significantly in the fourth quarter of 2008 and the agency said it expects they will worsen at least through the first half of 2009.

The company generated an EBITDA loss of $65 million in the fourth quarter of 2008 compared with a positive $93.5 million in the year-ago period as a result of steep declines in same-store sales and heavy markdowns of goods, S&P noted, adding that moreover, leverage jumped to more than 18.0x in 2008 from 3.3x in 2007 and EBITDA coverage of interest fell below 1.0x in 2008.

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