Macy’s Inc.’s star is rising, financially.
Moody’s Investors Service upgraded the department store’s credit rating to “Baa3” from “Ba1” — pushing Macy’s score out of “junk” territory and into investment grade. Fitch Ratings and Standard & Poor’s already also have investment grade ratings on the firm.
About $7 billion of debt was covered under Moody’s upgrade, which could make it easier for the company to borrow money.
“Macy’s clearly outperformed during the Holiday 2011 season and we believe this higher level of earnings is sustainable,” said Maggie Taylor, senior credit officer at Moody’s. “However, we do expect the rate of earnings growth at Macy’s to slow in 2012.”
Last week, Macy’s said its same-store sales rose a 5.7 percent for the final two months of 2011. Macy’s also increased its earnings guidance.
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“Moody’s believes that Macy’s size and solid position in the department store sector will make it somewhat resistant to the pressures facing the sector,” the rating agency said in the upgrade. “The rating is constrained by Macy’s concentration in the department store sector which Moody’s generally views as a more challenging retail sector given its fashion risk, exposure to economic cycles, and the intense pricing competition from the discounters and off-price retailers.”