September 15, 2003,
Moody's may downgrade Dillard's debt
NEW YORK — Moody's Investors Service, one of the major corporate credit rating agencies, said it is reviewing debt ratings of department store retailer Dillard's Inc. for a possible downgrade, citing the company's failure to build on last year's gains in operating performance.
The agency said, "Gross margins have been squeezed, as have those of other competitors, but inventory levels were still at undesirable levels through the end of the second quarter. Comparable store performance through the current fiscal year has under-performed competitors, renewing concerns about Dillard's competitive position."
Dillard's senior implied rating and senior unsecured ratings are currently "Ba3."
Moody's said its review "will focus on Dillard's plans for improving operating performance, which in fiscal year 2002 had responded positively to changes to the buying and merchandising process, system enhancements, and expanded private label offerings. The review will also incorporate Dillard's competitive position; the value of assets, including unencumbered real estate, which have helped support debt ratings; its plans for funding upcoming debt maturities and its liquidity profile and overall financial policy."
Spiegel Group looks to sell Newport News
DOWNERS GROVE, IL — Trying to raise cash as it works its way through bankruptcy and a sweeping restructuring, The Spiegel Group, parent of Spiegel and Eddie Bauer, said it's looking for buyers for its Newport News women's fashion subsidiary.
Bill Kosturos, Spiegel's interim ceo, said, "The decision to gauge market interest in one of the company's assets is a normal part of a Chapter 11 proceeding. We will evaluate the level of interest, taking it into consideration as we work to develop a plan or reorganization."
The retailer said it has directed Miller Buckfire Lewis Ying & Co. "to solicit parties who may be interested in acquiring" the wholly owned subsidiary. Newport News is a dual-channel direct marketer of moderately priced women's fashions.
For the month of July, Spiegel reported a loss from operations of $38.3 million.
And for the four weeks ended Aug. 23, Spiegel said net sales declined by 23 percent, to $1.044 billion from $1.359 billion a year ago. Same-store sales in the Eddie Bauer division declined by 7.0 percent for the four-week period and by 8.0 percent for the 34 weeks ended Aug. 23.
The retailer said Bauer same-store sales reflect "a low single-digit comparable-store sales decline in its apparel stores, combined with weaker comparable-store sales in its home and outlet stores." Net sales from retail and outlet stores fell by 18.0 percent, reflecting the impact of store closings. Eddie Bauer has cut its store base by 18.0 percent, to 467 stores from 569 a year ago.
Direct sales, catalog and internet, fell by 42.0 percent, "primarily due to lower customer demand, a planned reduction in catalog circulation and the ongoing negative effect of the discontinuation in early March of the company's private-label credit cards."
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