S&P revises Ascena Retail to negative

S&P said it revised its outlook on the Ascena Retail Group Inc. to negative from stable and affirmed all ratings, including the BB- corporate credit rating.

"The negative outlook incorporates our belief that the operating environment for specialty retail apparel will remain weak for a protracted period and that Ascena's operating metrics could further weaken as a result," S&P credit analyst Mathew Christy said in a news release.

"We think the continued decline in comparable-store sales and customer traffic is endemic of ongoing structural changes in specialty apparel industry, characterized by uneven operating results and lower sales.”

“In addition, we think Ascena could grow more reliant on promotional events to drive customer traffic, as evidenced by the results in the fiscal second quarter, which could further pressure EBITDA margins and cash flow generation," Christy added in the release.

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