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By Kim Khan
Investing.com – Shares of Macy’s (NYSE:) sank in afternoon trading following a debt downgrade on the company.
The stock fell 4%.
Standard & Poor’s cut its debt rating on Macy’s to BB+ from BBB-, with a stable outlook.
The downgrade puts the department store company’s bonds into junk territory in a category that says it is facing major uncertainties.
“We see considerable execution risks as the company attempts to improve its position in the challenging department store sector,” S&P said, according to Briefing.com. “Profitability under the plan is weaker than our prior expectation. This leads us to view Macy’s competitive position as less favorable.”
But outlook remains stable as the ratings agency anticipates Macy’s using free cash flow and asset sales to cut debt, keeping it at or below 3x earnings before interest, depreciation, taxation and amortization (EBITDA).
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