S&P cuts Starbucks

Standard & Poor's said it lowered ratings on Starbucks Corp. to BBB from BBB+ and affirmed the A-2 short-term rating, and removed ratings from CreditWatch with negative implications, where they were placed July 2.

The outlook is stable.

Weakening credit metrics caused by poor operating trends over the past three quarters were the primary cause for the downgrade, the agency said.

Other factors include slower growth and a potential disruption to operations while the company closes 600 stores and implements its new strategic plan, S&P added.

Ratings are based on Starbucks' leading market position and excellent brand recognition, as well as a history of good operating performance and strong cash flow generation, the agency said.

Credit metrics that are slightly below average for the rating category temper these strengths, S&P noted.

Leverage was 2.7 times for the 12 months ended June 29.

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