Rite Aid Downgraded by Standard & Poor’s
New York City, Standard & Poor’s Ratings Services revised its outlook on Camp Hill, Pa.-based Rite Aid Corp. to negative from stable. Ratings on the drug retailer, including the ‘B+’ corporate credit rating, were affirmed. “The outlook revision is based on concerns over continued poor sales trends in Rite Aid’s pharmacy business and that credit protection measures are likely to deteriorate if the company is unable to reverse the negative sales trend,” said Standard & Poor’s credit analyst Diane Shand. The company’s same-store sales have been well below its major competitors since June 2004.
The ratings reflect the challenges Rite Aid faces in improving operations at its drugstores amid intense competition. They also reflect the company’s significant debt burden and thin cash flow protection, according to Standard & Poor’s.
A&P Restructures Debt With Tender Offers
Montvale, N.J., The Great Atlantic & Pacific Tea Co. Inc. cashed in some of its outstanding notes with tender offers to help with the company’s debt. Senior retail analyst Mariza Costa believes the move makes sense because A&P previously had to pay interest on the notes that total in the millions of dollars. Costa said, “Interest expenses will decline substantially per quarter, and the company can concentrate on reorganizing and restructuring.”
The company, which has been having financial difficulties, plans to reorganize and become a “New A&P.”
Grass Sentence Reduced by a Year
Harrisburg, Pa., Former Rite Aid Corp. CEO Martin L. Grass had a year removed from his eight-year sentence. He is serving prison time for conspiring to obstruct justice and to defraud the company and its shareholders.