Research Update: C&S Wholesale Grocers Downgraded To 'BB-' On Weak Performance And Customer Base; Outlook Negative

Keene, N.H.-based distributor C&S Wholesale Grocers Inc. continues to face profit pressure from a challenged supermarket customer base, as well as elevated debt levels from increased asset-based revolver borrowings and higher pension-related and other liabilities. We are lowering the corporate credit rating to 'BB-' from 'BB', and revising the outlook to negative. We are also lowering our issue-level rating on the company's revolver to 'BB+' from 'BBB-' and lowering our rating on its senior notes due 2022 to 'BB' from 'BB+'. All recovery ratings are unchanged. The negative outlook reflects our expectation that C&S will continue to see credit metric pressure in the coming year. This is in part due to erosion of already razor-thin profit margins as its rapidly

...+ Keene, N.H.-based distributor C&S Wholesale Grocers Inc. continues to face profit pressure from a challenged supermarket customer base, as well as elevated debt levels from increased asset-based revolver borrowings and higher pension-related and other liabilities. + We are lowering the corporate credit rating to '##-' from '##', and revising the outlook to negative. + We are also lowering our issue-level rating on the company's revolver to '##+' from '###-' and lowering our rating on its senior notes due 2022 to '##' from '##+'. All recovery ratings are unchanged. + The negative outlook reflects our expectation that C&S will continue to see credit metric pressure in the coming year. This is in part due to erosion of already razor-thin profit margins as its rapidly evolving grocery customer base continues to redirect spending to e-commerce initiatives....

Research Update