Moody’s May Lower Rating of Some Carter Hawley Debt
Moody’s Investors Service, a prominent credit-rating agency in New York, said Monday that it will review some long-term debt of Carter Hawley Hale Stores and consider downgrading its rating.
The agency said the review was prompted by the Los Angeles-based retailer’s “continuing poor sales and earnings, in addition to prospects for future improvement in view of sluggish retail sales nationwide.”
Carter Hawley Hale, which owns the Broadway and four other department store chains, underwent a corporate overhaul last year that entailed spinning off its three specialty store operations into a new company called Neiman Marcus Group, now controlled by General Cinema Corp.
A Carter Hawley Hale spokesman said the company had no comment on Moody’s announcement.
Moody’s said that it had expected operating results, especially sales, to be “more robust” after the 1987 restructuring but that “minimal sales increases . . . have caused lower-than-anticipated earnings growth, which, in turn, has affected Carter’s cash flow and financial position.”
Like many other retailers nationwide, Carter Hawley Hale took on additional debt at a time when department and specialty stores were heading into a period of sluggish sales growth. Much of the lackluster performance has been pinned to poor sales of women’s clothing.
Pam Stubing, an analyst with Moody’s, emphasized that the agency has not “really moved on the rating. We will talk to the company first. We could downgrade, we could not.” She is expected to meet with the retailer’s executives next month.
As of Oct. 29, Carter Hawley Hale had long-term debt of $1.3 billion. The amount under review is $350 million, raised in two bond issues. The debt is rated B2, a mid-range level for speculative grades.
