Standard & Poor's Ratings Services is putting some of Sears Holdings Corp.'s ratings on negative CreditWatch after the company announced weaker-than-expected holiday sales and said it would close 100 to 120 of its Sears and Kmart stores.
"We believe that one of the primary issues is that the company has underinvested in its stores base, especially when compared with its peers," the ratings agency said in a statement.
S&P said late Wednesday that its actions were taken on all issue-level ratings on the company's debt and its "B'' long-term corporate credit rating, which is considered non-investment grade, or junk.
The ratings agency said that it's likely that credit protection metrics will deteriorate further in the near term as Sears continues to grapple with softening sales of consumer electronics, home appliances and clothing.
Sears Holdings said Tuesday that revenue at stores open at least a year fell 5.2 percent for the eight weeks ended Dec. 25, a crucial time because of the holiday shopping season. Kmart's layaway program, meant to help cash-strapped customers buy presents by paying for them a little at a time, faltered as Wal-Mart brought back layaway for the holiday season after getting rid of the program in 2006. Sears stores reported softer sales of home appliances, usually a strength.
Shares of the Hoffman Estates, Ill., company slipped 58 cents to $32.75 in afternoon trading.
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