Fitch Ratings Affs Shopko's 'BB-/B' Rtgs; Maintains Neg Rtg Outlook.Business Editors Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. has affirmed its ratings on Shopko Stores ShopKo Stores, Inc. is a chain of retail stores based in Ashwaubenon, Wisconsin, outside of Green Bay, behind Bay Park Square shopping mall which has ShopKo as one of its anchor tenants. The company employs approximately 16,000 people and has a presence in 13 states. Inc.'s (SKO SKO Some Kind Of SKO Superior Kerosene Oil SKO Something Kinda Ooh (Girls Aloud song) SKO Survival Kits Online (online store) SKO Sets, Kits & Outfits SKO Sales Kick Off SKO Soft Kill Option ) bank credit facility at 'BB-' and senior notes at 'B'. The Rating Outlook remains Negative, reflecting the company's weakened financial profile and competitive challenges longer term. Approximately $550 million of debt is affected. The ratings consider SKO's highly competitive operating environment as well as difficulty in achieving meaningful results from its Pamida division. The ratings also acknowledge SKO as a niche operator with a large portfolio of owned stores (approximately 60%). SKO has competed against the top two specialty discounters (Wal-Mart and Target ) for some time, with the level of their penetration in SKO's key markets continuing to increase. Nonetheless, the Shopko division, which accounts for 75% of total revenues, has recently shown a slight increase in comparable store sales, up 2.9% for the first quarter of FY 2003. The Pamida division's sales continue to lag - with 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 for the quarter of -5.5%. Despite negative sales trends operating margins at Pamida have improved as this division appears to have controlled its inefficiencies in its warehouse and inventory management. Despite mixed operating results, the company has improved its credit profile by focusing on debt reduction. The company has retired approximately $200 million of total debt in the past year by redirecting its focus from growing/adding new stores to utilizing excess cash flow to retire long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. . While capital expenditures will likely increase in 2002 from the maintenance levels in 2001 ($17 million), further debt retirement is anticipated. Debt repayment will be achieved via a combination of cash from operations and availability on its bank credit agreement. Approximately $170 million matures in 2003 and 2004. Longer term, the company's operating results need to improve in order to shift the focus from debt refinancing to becoming a more competitive operator. Also, the company is in the midst Adv. 1. in the midst - the middle or central part or point; "in the midst of the forest"; "could he walk out in the midst of his piece?" midmost of a search for a new CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. . Fitch anticipates that there may be further operating changes once new management is in place. |
|
||||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion