S&P MAY DOWNGRADE WOOLWORTH DEBT RATING
NEW YORK — Woolworth Corp.’s debt ratings were placed under review for a possible downgrade by both major rating agencies due to its weak performance in 1994 and poor prospects for 1995.
About $935 million in debt was affected.
Standard & Poor’s placed the retailer’s triple-B-plus senior debt rating and A-2 commercial paper ratings under review, while Moody’s Investors Service will review Woolworth’s Baa1 senior debt rating and Prime-2 commercial paper rating.
S&P downgraded Woolworth’s debt in June 1994 and October 1993.
Mary Lou Burde, analyst at S&P, said operating results were weaker than expected in the nine months, reflecting “modest improvement” in the specialty stores and declines in Germany.
“The disappointing results, together with lackluster sales growth in the fourth quarter, raise concerns as to the performance for the full year,” Burde said.
Moody’s said its review was prompted by “continuing weak earnings prospects and the concern that the turnaround in the company’s performance might be more challenging than anticipated.”
Both rating agencies expect to complete their review in one to three months after meeting with Woolworth’s new management. Roger Farah, former president of R.H. Macy & Co., became chairman and chief executive officer in mid-December.
Woolworth operates Woolworth general merchandise stores, Foot Locker, Kinney, Champs Sports, After Thoughts, Northern Reflections and Kids Mart.
— Fairchild News Service