CHICAGO — Fitch Ratings here said Friday it has downgraded its issuer default rating on Supervalu and its subsidiares to B from B-plus and has also revised its ratings on the company's credit facilties and notes, with a negative outlook.
Fitch said the downgrade and negative outlook reflect continued sales declines and market-share losses, the resulting pressure on margins and the challenge in reversing those trends over the medium term.
"It will be difficult for Supervalu to restore sales momentum in a sustainable manner while maintaining its operating margins, as required investments in grocery pricing to drive store traffic may not be fully offset by reductions in the cost structure or shrink levels or improved promotional effectiveness," Fitch said.
Besides downgrading the IDRs, Fitch also downgraded Supervalu's $1.5 billion bank credit facilities to BB-/RR2 from BB/RR2; lowered its term loan B to BB-/RR2 from BB/RR2; and downgraded its senior unsecured notes to B/RR4 from B+/RR4.