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Published
Dec 29, 2011
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S&P puts Sears on negative watch

By
Reuters
Published
Dec 29, 2011

Standard & Poor's Ratings Services today placed its 'B' long-term corporate credit rating on Sears Holdings Corp., along with all related issue-level ratings on the company's debt, on CreditWatch with negative implications.

Sears
Photo: Corbis Images

The placement of the ratings on Sears Holdings Corp. and its subsidiaries on CreditWatch with negative implications follows the company's announcement that sales and margins continue to be pressured by poor performance in the consumer electronics, home appliances, and apparel categories.

As a result, we expect that credit protection metrics will deteriorate further over the near term. The rating action is also a result of the company's announcement that quarter-to-date performance is significantly below expectations; the company has announced that it expects fourth-quarter EBITDA to be less than half of the prior year's amount.

In our view, the company's announcement of 100 to 120 store closures may do little to help its poor performance. We believe that one of the primary issues is that the company has underinvested in its stores base, especially when compared with its peers.

CreditWatch In resolving the CreditWatch, we will review the company's liquidity position as well as assess management's strategy and ability to turn around the company's weak operations.

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