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Moody’s Bottom (Restaurant and Retail) Rung

March 10, 2009
bcbgMoody’s on Tuesday published its “U.S. Bottom Rung,” a list of┬ácompanies that the corporate credit ratings agency thinks are at the most risk of defaulting on their debt. There are 283 companies on the list, which is current as of March 1, including the names of some beloved restaurants, retailers and food companies.

Why do this? The Wall Street Journal offers some possibilities:

“Sounds like Moody’s may be trying to get out in front on defaults, given they were perhaps a little behind on subprime mortgages and commercial mortgage-backed securities,” said David Resnick, managing director at investment banking firm Rothschild Inc. which works on many corporate bankruptcies and restructurings.

Moody’s and credit-rating rival Standard & Poor’s were criticized by the Senate in hearings late last year about the effectiveness of the ratings agencies.

The Journal also says Moody’s enters risky territory by naming some companies that say they are in, as the paper put it, decent fiscal health.

That said, here are the restaurants, retailers and food companies on that list, along with their probability of default rating and outlook (don’t worry about the debt specific ratings – they’re all different ways of saying “junk”):

* Arby’s Restaurant Group Inc (B3, negative)
* Barney’s New York Inc (Caa1, negative)
* BCBG Max Azria Group Inc (Caa3, negative)
* Beverages & More Inc (Caa1, negative)
* Blockbuster Inc (Caa1, negative)
* Bon-Ton Stores Inc (B3, negative)
* Brookstone Company Inc (Caa2, negative)
* Burlington Coat Factory Warehouse Corp (B3, negative)
* Center Cut Hospitality Inc (B3, negative)
* Chiquita Brands International Inc (B3, negative)
* Claire’s Stores Inc (Caa3, negative)
* Destination Maternity Corp (B3, negative)
* Dole Food Company Inc (Caa1, negative)
* Duane Reade Inc (Caa2, stable)
* Eddie Bauer Inc (Caa2, negative)
* El Pollo Loco Inc (Caa1, negative)krispy-kreme1
* Finlay Fine Jewelry Corp (Caa3, negative)
* Gold Toe Moretz Holdings Corp (Caa3, negative)
* Guitar Center Holdings Inc (Caa1, stable)
* Harry & David (Caa3, negative)
* Krispy Kreme Doughnut Corp (Caa3, negative)
* Loehmann’s Capital Corp (Caa2, negative)
* MAPCO Express Inc (B3, negative)
* Mattress Holdings Corp (Caa1, rating under review)
* Michaels Stores Inc (B3, negative)
* NBC Acquisition Corp (B3, negative)
* Oriental Trading Company Inc (Caa3, rating under review)
* OSI Restaurant Partners Inc (Ca, rating under review)
* Perkins & Marie Callender’s Inc (Caa3, negative)
* Quiksilver Inc (B3, negative)
* Rafaella Apparel Group Inc (Caa1, negative)
* Rare Restaurant Group LLC (Caa2, negative)
* Real Mex Restaurants Inc (Caa2, negative)
* Rite Aid Corp (Caa2, negative)
* Roundy’s Supermarkets Inc (B3, negative)
* Sagittarius Restaurants LLC (Caa1, stable)
* Sbarro Inc (Ca, negative)
* St. John Knits International Inc (B3, rating under review)
* TSA Stores Inc (B3, negative)



I am surprised that Borders Books did not make the list. They recently announced or closed stores on Michigan Ave, (Miracle Mile), in Chicago, and on the 3rd Street Promenade in Santa Monica, CA. Two better locations are hard to imagine.

Posted by John Seravalli | Report as abusive

This is a sad day for Moody’s. Several of the retailers on this less will still be going strong long after everyone at Moody’s will have expired.
Whereas, 6 months ago Moody’s had an “A” rating for Lehman Bros the week before they declared BK.
Moody’s is a joke.

Posted by Garry | Report as abusive

Krispy Creame? Seriously? Dole Food? uh. Time must indeed be bad. The good thing is that all these companies can come back from the brink with some slimming down and creative marketing.


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