S&P lowers Ascena Retail

S&P said it lowered the corporate credit rating on Ascena Retail Group Inc. to B from B+.

The outlook is negative.

The agency also said it lowered the rating on the company's senior secured term loan facility to B+ from BB-.

The 2 recovery rating is unchanged and indicates 70% to 90% expected default recovery.

The downgrades reflect an expectation that Ascena's operating results will remain challenged, resulting in weakened free operating cash flow generation, S&P said.

The agency said it thinks negative same-store sales and continued margin decline is likely for the rest of the year.

S&P said it expects further negative comparable sales at brands such as dressbarn and Ann Taylor, which will more than offset flat to modestly positive comparable sales at Justice and Lane Bryant.

Although the company continues to execute on its operating initiatives, such as product procurement and back-office function consolidation, the agency said it believes its omnichannel capabilities, store experience and loyalty programs lag behind peers.

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