Fitch: U.S. Retail Recovery in 2003 Uncertain.

Business Editors

NEW YORK--(BUSINESS WIRE)--Dec. 19, 2002

There is considerable uncertainty to the timing of eventual recovery in the U.S. retail industry, and signs of a recovery will not be apparent until later in 2003. Despite a significant number of ratings downgrades recorded during 2002, the rating outlook for the retail sector continues to skew negative. These findings appear in a U.S. retail industry overview published today by Fitch Ratings.

'Slow economic growth, combined with continued rapid expansion of retail selling space by the discounters, will keep a lid on comparable store sales increases and make it difficult for the supermarkets and department stores to gain much traction,' said Philip Zahn, Director, Fitch Ratings. 'Sluggish top-line growth will dampen earnings momentum for the industry as the benefit of inventory and expense reductions achieved in 2002 will be difficult to repeat.'

According to Fitch, a persistently difficult retail environment will keep pressure on the weaker retailers - particularly the department stores and apparel retailers. The overview discusses the sales growth, pricing and margin trends and the financial outlook across the retail industry, including department stores, discounters, specialty retail and food retail. Other risk factors identified in the report include credit card portfolio risk and consolidation.

'Although the slow-growth department store and supermarket sectors could benefit from the economies of scale that would come with additional consolidation, Fitch expects such activity in the retail industry to remain fairly muted in 2003' said Michelle Barishaw, Senior Director, Fitch Ratings.

The overview 'U.S. Retail Industry: Weakness Will Persist in 2003' can be found on the Fitch web site at www.fitchratings.com or by contacting the Ratings Desk at 1-800-893-4824.