Fitch lowers Parkson Retail

Fitch Ratings said it downgraded Parkson Retail Group Ltd.'s long-term issuer default rating and senior unsecured rating to B- from B.

The outlook is negative.

Fitch also said it maintained a recovery rating of RR4 on the senior unsecured rating.

The downgrades reflect the company's weaker operating performance, while the negative outlook reflects uncertainty over its ability to refinance or repay its $500 million bonds due in May 2018, the agency said.

Parkson's fundamentals have deteriorated over the past few years due to weaker consumer spending and competition from other retail formats, such as e-commerce and shopping malls, Fitch said.

Parkson's heavy reliance on rented properties has exacerbated the impact of the sales decline on margins, the agency said.

The company’s EBITDA fell to 2% of gross sales proceeds in 2015 and they are expected to be 1% to 2% in 2016 through 2019, Fitch said.

The company generally compares poorly to peers on most comparative financial metrics, the agency explained.

Its business profile also has been hurt by weaker consumer spending and competition from other retail formats and its profitability has been negatively affected by a high proportion of rented properties, Fitch said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.