S&P Downgrades Macy's To One Notch Above Junk Status

Standard & Poor's downgraded Macy's Inc.'s ratings to the last level of investment grade Wednesday, after the department store chain's weak fourth-quarter earnings. S&P lowered the rating to BBB-minus from BBB, and removed its from CreditWatch negative, where it had placed the issuer's rating on Jan. 5. The downgrade "reflects our view of the company's weakened operating performance and competitive standing given the ongoing industry challenges, such as sustained low customer traffic, increased price transparency, and unrelenting competition from online, fast-fashion, and off-price retailers," S&P said in a statement. The outlook is negative, meaning the agency could lower the rating again in the medium term. "We believe the apparel retail market will remain difficult and operating performance will continue to be pressured for Macy's, which could further weaken the company's competitive standing and/or its credit metrics, with a likely need for further debt reduction in 2018," said the agency. Macy's most active bonds, the 1.875% notes due to mature in January of 2022, were last trading at 99 cents on the dollar, according to MarketAxess.