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Moody’s lowers Macy’s rating to ‘negative’ 

New York – Credit rater Moody’s Investors Service today lowered its outlook on Macy’s Inc. to negative from stable, and affirmed all its other ratings on Macy’s including its senior unsecured rating of Baa3.

“The negative outlook reflects Moody’s concerns regarding the expected deterioration of the company’s credit metrics following the company’s announcement that it had reduced its earning guidance for this fiscal year ending Jan. 31, 2009 to a range of $1.30 to $1.50 from $1.70 to $1.85 per diluted share,” the service said.

“This degree of earnings decline – if it occurs – could result in debt protection measures that are too weak for the current Baa3 rating,” Moody’s continued.

“Should operating performance decline by more than the company expects, then – barring other changes in the company’s capital structure or cash flow expectations – debt protection measures could weaken further and be more appropriate for a lower, non-investment grade rating,” Moody’s warned.

Non-investment grade is typically referred to as “junk” status.

The Macy’s Inc. instrument ratings as affirmed today by Moody’s:

* Macy’s, Inc. Senior Unsecured Shelf = (P) Baa3

* May Department Stores Company Senior Unsecured = Baa3

* Macy’s Retail Holdings, Inc. Senior Unsecured = Baa3

* Macy’s Retail Holdings, Inc. Subordinate Shelf = (P) Ba1

* Macy’s Retail Holdings, Inc. Commercial Paper = Prime-3

“The last rating action on this company,” Moody’s noted, “was a downgrade of Macy's senior unsecured rating to Baa3 from Baa2 and a downgrade of its commercial paper rating to P-3 from P-2 on May 15, 2008.”

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