New York City Standard & Poor's Ratings Services said Thursday it placed ratings of six department store companies on CreditWatch negative, citing pessimism over the impact of the U.S. recession on the troubled sector.
S&P will review ratings on Dillard's Inc.; Macy's Inc.; Neiman Marcus Group Inc.; Nordstrom Inc.; J.C. Penney Co.; and Sears Holdings Corp. Currently all of the stores have investment-grade ratings, although J.C. Penney's rating is just one notch above junk.
S&P also changed its outlook on three department store companies to "negative" from "stable" — Bon-Ton Stores Inc., Kohl's Corp., and Saks Inc. — but said it doesn't expect to lower their ratings in the near-term.
In an Associated Press report, Standard & Poor's credit analyst Diane Shand said the recession will likely worsen through the first half of 2009, given weakening employment, the sluggish housing market, and turmoil in financial markets. She expects department store operators to plan inventories, expenses, and store growth conservatively in 2009 to protect margins.