Supermarkets’ Credit Ratings on the Line

Kroger Co., Albertson’s Inc. and Safeway Inc., the three biggest U.S. grocery chains, may have their credit ratings cut by Standard & Poor’s as competing retailers take sales, the ratings service said Wednesday.

The companies’ credit ratings are under review for a possible downgrade to the lowest investment grade, according to a statement issued by S&P.; The ratings of all three are two steps above junk, or non-investment grade.

Kroger, the largest U.S. grocer and parent of Ralph’s, and its rivals face increased competition from discounters such as Wal-Mart Stores Inc. and Costco Wholesale Corp., S&P; said. The retailers also haven’t recovered from effects of a 4 1/2 -month strike in Southern California that ended in February 2004, the ratings service said.

“Although Albertson’s, Kroger and Safeway, as large national players, are considered to be better positioned to withstand these pressures than smaller operators, operating results indicate they are not immune,” S&P; analyst Mary Lou Burde said in the statement.

Kroger fell 30 cents to $15.32 on the New York Stock Exchange. Albertson’s fell 32 cents to $19.65. Shares of Safeway, based in Pleasanton, Calif., and the parent of Vons and Pavilions, fell 14 cents to $18.13.

S&P; probably will decide if it will downgrade the stocks within 90 days, Burde said.