Consolidated Stores Assigned BBB Corp Cred Rtg by S&P.NEW YORK--(BUSINESS WIRE)--Standard & Poor's CreditWire 10/1/97--Standard & Poor's today assigned as·sign tr.v. as·signed, as·sign·ing, as·signs 1. To set apart for a particular purpose; designate: assigned a day for the inspection. 2. its triple-'B' corporate credit rating to Consolidated Stores Corp. The corporate credit rating is not assigned to any specific issue, but is a general assessment of overall credit risk. The rating is based on Consolidated's position as the nation's largest close-out retailer and largest purchaser of close-out toys, its good track record, and a moderate financial policy. However, these strengths are mitigated mit·i·gate v. mit·i·gat·ed, mit·i·gat·ing, mit·i·gates v.tr. To moderate (a quality or condition) in force or intensity; alleviate. See Synonyms at relieve. v.intr. To become milder. by increasing competition from other discount store formats. Consolidated's more than 600 Odd Lots and Big Lots stores operate within an industry that is generally recession-resistant, carries high gross margins, and relies on established buying relationships with name-brand consumer goods consumer goods Any tangible commodity purchased by households to satisfy their wants and needs. Consumer goods may be durable or nondurable. Durable goods (e.g., autos, furniture, and appliances) have a significant life span, often defined as three years or more, and companies. Because of its size, Consolidated is able to purchase a manufacturer's entire stock of excess inventory, ensuring controlled distribution of products that may result from production overruns, package changes, discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: products, and returns. The company has a track record of positive same store sales Same Store Sales A statistic used in retail industry analysis. It compares sales of stores that have been open for a year or more. Notes: This statistic allows investors to determine what portion of new sales has come from sales growth and what portion from the opening of , consistent operating margins Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: of 13%, and return on permanent capital of approximately 20%. Growth was boosted dramatically in mid- mid- pref. Middle: midbrain. 1996 with the acquisition of Kay-Bee Toys, a chain of over 1,000 toy stores A toy store, or toy shop, is a retail business specializing in the services of selling toys. No longer held to the limitations of the brick and mortar outlet, the toy store has successfully created a presence within the e-commerce industry. featuring both current and close-out toys. Kay-Bee's focus on mall stores and the inclusion of non-close-out merchandise represent a departure for management. Yet initiatives to increase close-out product, lower costs, and improve distribution efficiencies are resulting in improved profitability at the chain. Still, given its position as the exclusive toy store in the mall, Kay-Bee may find tougher competition as it grows its strip center stores, especially for current "in-line" products. The success of Consolidated's close-out and toy businesses lies in the differentiation of their formats from other discount stores that may offer similar merchandise at low prices. This could become increasingly important as discount retailers continue to increase their presence throughout the U.S. Management's moderate financial policy is illustrated by its use of $190 million in equity to partially fund the $285 million Kay-Bee acquisition, bringing total lease-adjusted debt to capital to 47%. Financial flexibility is enhanced by the company's $600 million revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility, which is expected to adequately support seasonal borrowing needs. OUTLOOK: STABLE The combined close-out and toy businesses are expected to generate solid returns based on continued good execution of the close-out business, anticipated improvement at Kay-Bee, and a moderate rate of growth. Despite the likelihood of increasing competition, these factors should contribute to near-term ratings stability. If the company is able to demonstrate successful execution of operating and financial strategies, a change in the credit profile may then be indicated. CONTACT: Standard & Poor's Rating Services Gerald A Hirschberg, 212/208-1625 |
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