The speculative-grade rating on privately owned C&S Wholesale Grocers Inc. and 75% owned subsidiary, C&S Group Enterprises LLC, reflect the company's position as one of the leading wholesale grocery distributors, characteristically thin margins, significant customer concentration, some seasonality to quarterly operating results, high debt leverage, and moderate cash flow protection measures. This is partially offset by its fairly low cost operating position and an experienced management team. In Standard&Poor's Ratings Services' view, C&S Wholesale Grocers plays an important role between suppliers and grocery retailers and its size and economies of scale give it an advantage over smaller competitors in this fragmented industry. However, significant customer concentration is a concern and, in our view, operating performance could be materially
