RE: Today. Moody's affirms Kroger's Baa1 rating13 Nov 2019 15:55
Could be something to do with the OCDO SP rise today and from Moodys. Looks rather upbeat to me.
Rating Action: Moody's affirms Kroger's Baa1 rating
12 Nov 2019
New York, November 12, 2019 -- Moody's Investors Service ("Moody's") today affirmed The Kroger Co.'s ("Kroger") senior unsecured rating at Baa1 and also affirmed the company's Commercial Paper rating of Prime-2. The outlook remains stable.
"While the competitive pressures in food retailing continue to impact the supermarket space, Kroger's large scale, its dominant market position vis-à-vis other traditional food retailers, its store format diversification, strong corporate brands, and strategic investments under its Restock Kroger initiative will provide the impetus for topline and earnings growth in the next 12-18 months," stated Moody's Vice President Mickey Chadha. "We expect Kroger to continue to report identical store sales growth, increase opearting profit and maintain a balanced financial policy, the corner stone of which is its 2.3-2.5 times reported net debt to EBITDA target", Chadha further stated.
Affirmations:
..Issuer: Kroger Co. (The)
....Senior Unsecured Commercial Paper, Affirmed P-2
....Senior Unsecured Regular Bond/Debenture, Affirmed Baa1
..Issuer: Rutherford (County of) TN, Ind. Devel. Board
....Senior Unsecured Revenue Bonds, Affirmed Baa1
..Issuer: Carbondale (City of) IL
....Senior Unsecured Revenue Bonds, Affirmed Baa1
Outlook Actions:
..Issuer: Kroger Co. (The)
....Outlook, Remains Stable
RATINGS RATIONALE
Kroger's Baa1 senior unsecured rating is supported by its large scale, leading market position vis-à-vis other traditional food retailers and diversified store format. The company's focus on customer satisfaction and loyalty, its ability to offer a one stop shopping experience and a wide array of private label and fresh as well as prepared food offerings gives it a distinct competitive advantage over its peers. While the continued pricing pressure, lower margins on prescriptions filled at it pharmacies due to reimbursement pressure, wage pressure and investments in digital assets have weakened Kroger's credit metrics, with debt/EBITDA at 4.0x at the end of the quarter ending August 17, 2019, Moody's expects metrics to gradually improve in the next 12 months as the company continues to roll out its "Restock Kroger" plan and grow ex-fuel identical store sales over 2% in fiscal 2019 (ending February 2020) and gain further momentum for topline growth in fiscal 2020. Although Kroger is not insulated from fierce competition, Kroger will remain a strong and effective competitor given its size, store format diversification, price initiatives, and wide array of private and national brands. The acquisition of meal kit provider Home Chef and a 6% stake in British online grocery operator Ocado Group to open a series of automated warehouses for grocery delivery in the U.S. demonstrates the continuing investments that K
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