Moody’s Investors Service gave Macy’s Inc. a vote of confidence Tuesday, raising its outlook on the company’s credit rating to “positive” from “stable.”

 

The debt watchdog, which affirmed Macy’s corporate family credit rating of “Ba1,” said operational changes at the department store would help it counteract rising commodity costs. An upgrade would put Macy’s back into investment-grade territory and could make it easier for the company to borrow money.

 

“We expect Macy’s operating performance to continue to improve as it fine tunes the My Macy’s [merchandise localization] program and focuses on further integrating its stores and online businesses,” said Maggie Taylor, senior credit officer at Moody’s. “This will likely offset any earnings pressure from rising commodity costs and result in further strengthening in credit metrics so long as Macy’s financial policies remain balanced.”

 

How effectively retailers can avoid, absorb or pass along higher cotton, transportation and other costs has become one of the biggest question marks for second-half profitability this year.

 

Shares of Macy’s outperformed the market, gaining 3.3 percent to $24.98 Tuesday, as the S&P Retail Index slipped 0.5 percent, or 2.65 points, to 540.92, and the Dow Jones Industrial Average inched up 0.15 points to 12,807.51.

 

The most-prominent retail decliner of the day was Sears Holdings Corp., which dropped 9.9 percent to $75.88 after the company warned that first-quarter losses would tally $145 million to $195 million.

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