Moody's raises Dillard's ratings |
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Fri, 04 May 2007 21:27
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NEW YORK (AP) - Moody's Investors Service said Friday it raised the corporate family rating of department store chain Dillard's Inc. to 'Ba3' from 'B1' with a stable outlook, based on the company's debt reduction, liquidity and portfolio of real estate assets.Moody's also raised its rating on Dillard's senior unsecured notes to 'B1' from 'B2,' and its probability of default rating to 'Ba3' from 'B1.'Obligations rated 'Ba' are considered to have speculative elements and are subject to substantial credit risk, but obligations rated 'B' are considered more speculative and subject to higher risk.Moody's said Dillard's is expected to generate positive free cash flow while continuing to reduce debt over the intermediate term. The ratings service also noted the department store chain's negative same-store sales trend has begun to show signs of improvement.Moody's said Dillard's corporate family rating has been hurt by competition and volatile margin performance over the last several years. In addition, Moody's has been concerned about corporate governance, 'including the limited independence of the board of directors from the controlling family and weak accountability of senior management.'Moody's stable outlook reflects recent signs of increasing margins, and the ratings service's expectation that the Little Rock, Ark.-based company will maintain strong liquidity and further reduce its debt levels over the next 12 to 18 months.Dillard's shares gained 23 cents to close at $35.10.Copyright 2007 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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