Fitch Ratings downgraded Sears Holdings Corp. credit ratings one notch deeper into junk territory, noting declining sales have hurt profits even as the retailer has cut costs.
The credit rating agency lowered the retailer’s long-term issuer default ratings to B from B+ with a negative outlook. The new rating is five steps below investment grade.
The downgrade reflects continued deterioration in adjusted earnings on worse-than-expected sales and a “precipitous decline” in the first quarter, said Brian Bertsch, analyst at New York-based Fitch in a Tuesday report.
In May, Sears reported that it swung to a first-quarter loss as sales sank at Kmart and Sears stores and its core appliance business continued a downward slide.
Fitch described Sears’ liquidity as “adequate but declining” and the agency expects Sears debt to increase as it will have to borrow more to fund operations.
“The magnitude of decline in profitability and the lack of visibility to turn around operations remain a major concern,” said Bertsch.
Sears offiicials weren’t immediately available for comment.
smjones@tribune.com
