Fitch ups Saks

Fitch Ratings said it upgraded the issuer default rating of Saks Inc. to B from B-, along with its $500 million senior secured bank credit facility to BB with a recovery rating of RR1 from BB- with a recovery rating of RR1 and its senior unsecured notes to BB with a recovery rating of RR1 from B with a recovery rating of RR3.

The outlook is stable.

The upgrades reflect the positive momentum in comparable store sales trends since December 2009 and the improvement in EBITDA and credit metrics relative to expectations, Fitch said.

For 2011 and 2012, Fitch said it expects the company to report low single digit comparable growth and as a result, credit metrics are expected to improve modestly.

Embedded in the sales expectation is a cautious outlook for the luxury sector, the agency said. While recent trends for luxury department store retailers have generally outperformed the broader department store sector, it still is premature to determine a sustained level of sales growth for 2011 through 2012, Fitch added.

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