Shop Talk

Moody’s Bottom (Restaurant and Retail) Rung

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) * 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) (Photos\Reuters)

Check Out Line: Food vs foreign currency

Check Out Sara Lee and Kraft Foods joining the “stronger dollar” bandwagon.

Both food makers cut their profit forecasts for the current year, citing the pain they expect from the stronger U.S. dollar decreasing the value of sales from international markets.

But currency alone is not to blame for oversease woes.

Sara Lee said it is seeing pressure in certain overseas markets due to worsening economic conditions.

“In our international business we are adjusting our plans and refocusing our resources to help offset significant economic downturns in many of our key markets, most notably Spain, France and the United Kingdom,” sad Brenda Barnes, the company’s chief executive officer.

Meanwhile, Kraft’s CEO said the company is seeing a slowdown in sales growth in the EU and developing markets.

Sara Lee, which makes Jimmy Dean breakfast sausages and its namesake bakery products, and Kraft, which sells Oreo cookies and its namesake cheese, have also faced increased competition from private label manufacturers as shoppers seek to save every dollar they can amid a deepening global recession.

Check Out Line: Food makers surprise Wall St on the upside

Check out those higher prices at the grocery store helping General Mills and ConAgra to post quarterly results above Wall Street expectations.

Both food makers reported lower profits on a net basis.

But excluding various items, their earnings were stronger than analysts were expecting.

General Mills, the maker of Progresso soup and Cheerios cereal, has benefited along with other food companies as consumers buy more soup, cake mixes and yogurt to save money by eating at home more often. 

It raised its full-year forecast.

ConAgra was helped by strong results at its commercial foods business, which sells specialty potatoes, seasonings and other items.

But while General Mills was able to raise prices and sell more retail food in the United States, ConAgra saw sales volume fall in its consumer good business, hurt by weakness at its Banquet frozen dinner and Wesson cooking oil brands.