Moody’s Upholds Credit Rating on Carter Hawley Hale Debt

A Wall Street credit rating agency on Thursday said it will uphold its rating on some long-term debt of Carter Hawley Hale Stores, owner of the Broadway chain.

The announcement came after a monthlong review by Moody’s Investor Service, which said it was considering downgrading the B2 rating on $350 million worth of long-term debt issued by the Los Angeles-based retailer.

The B2 rating places the bonds in the middle of a “speculative” class of debt, said Pam Stubing, an analyst with Moody’s.

Moody’s launched the review of Carter Hawley, which owns five department store chains, based on “continuing poor sales and earnings, in addition to prospects for future improvement in view of sluggish retail sales nationwide.”

But after conducting its review, Moody’s now expects Carter Hawley to show “improved operating performance in spite of competitive pressures,” Stubing said.

She said the company stands to benefit from relaxing standards for new credit card customers, which should stimulate sales and a California law that allows retailers to set the interest rate charged to their credit card customers. Carter Hawley said it will raise its rate from 18%--the highest rate allowed under the previous law--to 19.8% for the first $1,000 of a customer’s balance.

Carter Hawley underwent a corporate overhaul in 1987 that included spinning off its three specialty store operations into a new company called Neiman Marcus Group, now controlled by General Cinema Corp. In addition, the company took on additional debt--it has a total $1.3 billion in outstanding long-term debt--at a time when retailers nationwide have suffered from lackluster sales growth.