S&P: Sobeys outlook stable

Standard & Poor's said it revised the outlook on Sobeys Inc. to stable from negative and affirmed the BB+ long-term corporate rating.

According to S&P, the revised outlook reflects expectation that Sobeys' operating performance and financial risk profile will remain stable in the next year.

Ratings reflect the company's elevated capital expenditure program leading to marginal cash flow generation, aggressive financial leverage for the ratings and the highly competitive food retailing industry, the agency said.

These features are partially mitigated by Sobeys' No. 2 market share position in Canada, good geographic and format diversity, and improving operating performance supported by solid same-store sales performance, S&P noted.

The issuer has an adjusted debt-to-EBITDA ratio of 3.8 times.

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