Moody's Eyes Supervalu Downgrade

Moody's Investor Service here said Wednesday it has placed the Ba3 corporate family rating of Supervalu and the senior unsecured debt ratings for the company and its subsidiaries on review for possible downgrade based on concerns the credit metrics could remain weak for an extended period.

NEW YORK — Moody's Investor Service here said Wednesday it has placed the Ba3 corporate family rating of Supervalu [2] and the senior unsecured debt ratings for the company and its subsidiaries on review for possible downgrade based on concerns the credit metrics could remain weak for an extended period.

Moody's said its review will focus on the likelihood of meaningful improvement in credit metrics in the near term and on the prospects for Supervalu to maintain sufficient cash fow for its business investment and ongoing debt reduction.

The ratings aganecy said it is concerned that operating profits at Minneapolis-based Supervalu will remain pressured due to the ongoing challenging price environment for supermarkets, combined with potential disruptions to operations as the company carries out strategic initiatives in its traditional supermarkets.

According to Moody's, Supervalu's operating profit margin has been reasonably stable, though at levels that are weak relative to national competitors; while performance metrics, including same-store sales and profitability of grocery operations, have lagged other national chains, due in part to the company's re-merchandising efforts.