NEW YORK -- Standard & Poor's Corp. downgraded the debt of Kmart Corp. to triple-B-plus from single-A, citing concerns about the firm's core discount business.

More than $3.7 billion in debt is affected.

The rating agency noted in its statement that the firm has taken actions to protect its competitive position, including the updating of more than half of its domestic stores.

"While sales at the renovated Kmart stores are higher than those in the unmodernized stores, S&P is concerned about the ultimate degree of improvement in profitability, given the extremely competitive nature of the discounting business.

"Current measures of store productivity are well below the industry leaders. Also, there are concerns about Kmart's ability to successfully execute its merchandising strategy which focuses on apparel," it said.

S&P also noted operating results from higher-growth specialty store businesses "have been disappointing."

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