DUFF & PHELPS DOWNGRADES SEARS, ROEBUCK & CO. DEBT RATING TO 'A-'
CHICAGO, March 4 /PRNewswire/ -- Duff & Phelps Credit Rating Co. has lowered its ratings of Sears, Roebuck & Co.'s senior unsecured debt to "A-" (Single-A-Minus) from "A" (Single-A) and preferred stock to "BBB+" (Triple-B-Plus) from "A-" (Single-A-Minus). Additionally, Duff & Phelps lowered its rating of Discover Credit Corp. preferred stock to "A-" (Single-A-Minus) from "A" (Single-A). The commercial paper ratings of Sears, Sears Roebuck Acceptance Corp. and Discover Credit are reaffirmed at Duff 1 (One). Also, all the debt securities of these three entities have been removed from D&P's Rating Watch -- Unfavorable. Approximately $9 billion of debt securities are affected by the downgrade. A spokesperson for D&P said: "The rating action reflects our concerns regarding Sears' ability to turn around its troubled merchandising group. Retailing operations are being directed by a new management team, headed by Arthur Martinez, that is committed to streamlining operations, reducing costs, and improving accountability in order to reposition Sears for the 1990s and beyond. Included in this effort were the decisions to exit certain businesses (most notably catalog) and close 113 unprofitable retail stores. However, these actions, while positive, are the latest in a long series of attempts over the past decade at reinvigorating its mature retailing business. The systemic problems of bloated overhead, poor productivity, and declining customer perceptions will be difficult to overcome, and results of the latest reorganization effort won't be known for several years. Furthermore, Sears' prospects for a successful merchandising turnaround are made doubly difficult by the increasingly competitive and dynamic retailing environment. "We continue to view Allstate as a major support to our Sears rating. However, recent large underwriting losses and related statutory capital issues, together with the proposed sale of 20 percent of Allstate's common stock, reduces our confidence in the ability of Allstate to support Sears' credit ratings over the near to intermediate future." -0- 3/4/93 /CONTACT: W. Dudley Heer of Duff & Phelps, 312-368-3123/ (S)
CO: Sears, Roebuck & Co. ST: Illinois IN: REA SU: RTG
GK -- NY082 -- 3088 03/04/93 14:56 EST
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|Date:||Mar 4, 1993|
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