Recipient email addresses will not be used in mailing lists or redistributed.
Use semicolon to separate each address, limit to 20 addresses.
characters you see
You have successfully sent the research.
Please note: some research requires a paid subscription in order to access.
Already a customer?
Don't want to see this again?
Accept our to continue to Moodys.com:
AND SCROLL DOWN!
By clicking “I AGREE” [at the end of this document],
you indicate that you understand and intend these terms and conditions to be
the legal equivalent of a signed, written contract and equally binding, and
that you accept such terms and conditions as a condition of viewing any and all
Moody’s information that becomes accessible to you [after clicking “I AGREE”] (the
“Information”). References herein to “Moody’s” include Moody’s
Corporation, Inc. and each of its subsidiaries and affiliates.
Terms of One-Time Website Use
you have entered into an express written contract with Moody’s to the contrary,
you agree that you have no right to use the Information in a commercial or
public setting and no right to copy it, save it, print it, sell it, or publish
or distribute any portion of it in any form.
acknowledge and agree that Moody’s credit ratings: (i) are current opinions of
the future relative creditworthiness of securities and address no other risk; and
(ii) are not statements of current
or historical fact or recommendations to purchase, hold or sell particular
securities. Moody’s credit ratings and
publications are not intended for retail investors, and it would be reckless
and inappropriate for retail investors to use Moody’s credit ratings and
publications when making an investment decision. No
warranty, express or implied, as the accuracy, timeliness, completeness,
merchantability or fitness for any particular purpose of any Moody’s credit
rating is given or made by Moody’s in any form whatsoever.
3. To the extent permitted by law, Moody’s and its directors,
officers, employees, representatives, licensors and suppliers disclaim
liability for: (i) any indirect, special, consequential, or incidental losses
or damages whatsoever arising from or in connection with use of the
Information; and (ii) any direct or compensatory damages caused to any person
or entity, including but not limited to by any negligence (but excluding fraud
or any other type of liability that by law cannot be excluded) on the part of
Moody’s or any of its directors, officers, employees, agents, representatives,
licensors or suppliers, arising from or in connection with use of the
4. You agree to read [and
be bound by] the more detailed disclosures regarding Moody’s ratings and the
limitations of Moody’s liability included in the Information.
5. You agree that any disputes relating to this agreement or your use of
the Information, whether sounding in contract, tort, statute or otherwise,
shall be governed by the laws of the State of New York and shall be subject to
the exclusive jurisdiction of the courts of the State of New York located in
the City and County of New York, Borough of Manhattan.
03 Dec 2004
MOODY'S AFFIRMS RATINGS OF DELHAIZE AMERICA, INC. (SENIOR IMPLIED AT Ba1); OUTLOOK CHANGED TO POSITIVE
Approximately $2.9 Billion of Debt Instruments Affected
New York, December 03, 2004 -- Moody's Investors Service affirmed the Ba1 senior implied and other
ratings of Delhaize America, Inc., but changed the
rating outlook to positive from stable. The outlook change is based
on Moody's expectations that the company will be able to sustain
its solid comparable store sales increases; that revenues,
profitability and cash flow could further improve as a result of operating
and investment initiatives; and that a conservative financial policy
characterized by ample liquidity will be maintained.
Senior implied at Ba1.
Senior unsecured and Medium Term Notes at Ba1.
Senior unsecured shelf at (P)Ba1.
Issuer rating at Ba2.
Speculative Grade Liquidity Rating at SGL-1.
The long-term ratings of Delhaize America, Inc. ("DZA")
reflect the company's extensive East Coast franchise, solid
free cash flow, and the benefits of initiatives to grow revenues
and profitability while some southeastern competitors are constrained
in their ability to react. They also incorporate DZA's very
good liquidity as evidenced by its SGL-1 rating. The ratings
also reflect the intense competition in all of the DZA's major trade
areas, the impact on consolidated performance of the slow demographic
growth in the Northeast, and event risk from both acquisition opportunities
and the potential cash demands of a foreign parent.
Strongly positive comparable store sales increases, further improvement
in profit margins and solid performance at the Kash n' Karry subsidiary
would put upward pressure on the ratings. An upgrade would also
require adjusted debt to EBITDAR below 3 times (versus nearly 4 times
at fiscal year end 2003 and 3.54 times for 12 months ended October
2004), fixed charge coverage of at least 3.75 times (3.1
and 3.5 respectively) and retained cash flow plus 2/3rd rent to
adjusted debt of at least 20% (15.6% and 18%
respectively). Given the change in outlook, a ratings downgrade
is unlikely. Over the longer term, ratings could be lowered
if comparable store sales become severely negative or margins erode materially.
Ratings could also be downgraded if fixed charge coverage falls below
2 times, if adjusted debt to EBITDAR rises above 4.25 times
or if retained cash flow plus 2/3rd rent to adjusted debt is less than
DZA, a wholly owned subsidiary of Belgium's Delhaize Group,
operates about 1494 supermarkets along the populous Eastern seaboard.
Operations are concentrated in the Carolinas and Virginia in the Food
Lion format (81.3% of total stores), in Florida with
the Kash n' Karry ("KNK") low cost banner (6.9%)
and in Hannaford's large store format in New England (8.2%).
The October 2003 acquisition of Harvey's 54 stores (3.6%)
greatly increased DZA's coverage of the important Georgia market.
The purchase of Victory Super Markets (19 stores) in Massachusetts and
New Hampshire and the recently announced agreement to acquire 10 Winn-Dixie
stores in North Carolina and Virginia will increase penetration in important
trade areas. DZA's Northeastern operations are in generally
over-stored markets, and its Southeastern stores compete
against Wal-Mart and some superior operators such as Publix.
Nonetheless, DZA's comparable store sales increases have exceeded
those of most major supermarket chains in the last several quarters,
an especially noteworthy achievement given that DZA's stores do
not sell gasoline. (Fuel has been a material contributor to anemic
comparable store sales gains at far larger and more diversified supermarkets.)
Certainly, the company's remodeling efforts, Hannaford's
prominent position, and the challenges facing some Southeastern
competitors like Winn-Dixie have all contributed to DZA's
solid comparable store sales performance. However, competition
is expected to remain fierce for the foreseeable future in all of the
company's major markets, and will continue to pressure DZA's
ability to maintain healthy revenues and operating margins.
A number of strategic initiatives, especially at DZA's largest
division, are being implemented to boost sales and profitability
at the expense of some less well capitalized contenders. Food Lion's
Market Renewal program remodels all of the stores in an entire trade area
at the same time to maximize customer reaction. Two markets have
been renewed, and a third is in progress. Cost reductions
at Food Lion of $100 million in 2003, from the closing of
44 underperforming stores, have funded investment in lower retail
prices to spur revenue growth. In addition, Food Lion and
KNK have adopted Hannaford's inventory system that allows for better
margin analysis, shrink control and inventory management.
Underperformer KNK launched a new strategy in 2003 to improve its merchandise
and execution. Its initiatives include offering only the best fresh
products, adding a natural and organic department to its stores,
and broadening the deli offerings. All KNK stores will be re-branded
as Sweetbay Supermarket over the next three years to underscore this new
strategy. In early 2004, DZA also closed 34 KNK stores,
exiting eastern Florida. Hannaford, a consistently strong
performer, has fine-tuned its appeal with a "Festival"
initiative, a better assortment of products in a pleasing shopping
environment. All these efforts are strategically sound, but
could take time to yield desired results.
Comparable store sales rose only 0.6% in fiscal 2003.
'Comps' become stronger in fiscal 2004 -- up 2.5%
in the first quarter, 1.4% in the second, and
1.7% in the third -- as the company's numerous
2003 initiatives gained traction. The apparent decline in margins
in fiscal 2003 is due primarily to the charge of $87.3 million
(56 basis points of sales) in cost of goods sold related to the change
in inventory valuation methods. When the charge is excluded,
margins for fiscal 2003 were predominantly unchanged from fiscal 2002.
Profit margins were up for the 12 months ending October 2, 2004,
despite the promotional activities of competitors. DZA, because
of Hannaford, has one of the highest margins in the supermarket
industry. As a consequence, operations generate cash well
in excess of aggressive capital expenditures and acquisitions, allowing
DZA to remain very liquid. Cash balances of $725 million
at the end of the recent third fiscal quarter can easily fund the company's
next material debt payment ($600 million in April 2006).
Moody's anticipates that shareholder enhancement, if any,
will be moderate and that acquisitions will be manageable in terms of
consideration and integration challenges.
DZA is a holding company, with operations conducted in its wholly
owned subsidiaries Food Lion, Kash n' Karry, Hannaford,
and Harvey's. Funded debt is and will continue to be concentrated
at the holding company. Each material subsidiary guarantees both
DZA's public debt and its unrated bank agreement. The $350
million bank revolving credit agreement expires in July 2005 and is secured
by the inventory of certain subsidiaries. There were no borrowings
under this facility in fiscal 2003 or in fiscal 2004 to date. Moody's
expects that the company will renew this facility well in advance of expiration.
Headquartered in Salisbury, North Carolina, Delhaize America,
Inc operates about 1494 supermarkets under the Food Lion, Hannaford,
Kash n' Karry and Harvey's banners along the East Coast of
the United States.
Corporate Finance Group
Moody's Investors Service
Elaine E. Francolino
VP - Senior Credit Officer
Corporate Finance Group
Moody's Investors Service
No Related Data.
© 2019 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.
CREDIT RATINGS ISSUED BY MOODY'S INVESTORS SERVICE, INC. AND ITS RATINGS AFFILIATES (“MIS”) ARE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MOODY’S PUBLICATIONS MAY INCLUDE MOODY’S CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUAL FINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE MOODY’S RATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’S RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICE VOLATILITY. CREDIT RATINGS AND MOODY’S OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOT STATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK AND RELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. CREDIT RATINGS AND MOODY’S PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. NEITHER CREDIT RATINGS NOR MOODY’S PUBLICATIONS COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR. MOODY’S ISSUES ITS CREDIT RATINGS AND PUBLISHES MOODY’S PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDING THAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE, HOLDING, OR SALE.
MOODY’S CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY RETAIL INVESTORS AND IT WOULD BE RECKLESS AND INAPPROPRIATE FOR RETAIL INVESTORS TO USE MOODY’S CREDIT RATINGS OR MOODY’S PUBLICATIONS WHEN MAKING AN INVESTMENT DECISION. IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.
ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.
CREDIT RATINGS AND MOODY’S PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM IS DEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.
All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. MOODY'S adopts all necessary measures so that the information it uses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However, MOODY’S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing the Moody’s publications.
To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for any indirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use any such information, even if MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses or damages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of a particular credit rating assigned by MOODY’S.
To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatory losses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for the avoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.
NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDIT RATING OR OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.
Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any rating, agreed to pay to Moody’s Investors Service, Inc. for ratings opinions and services rendered by it fees ranging from $1,000 to approximately $2,700,000. MCO and MIS also maintain policies and procedures to address the independence of MIS’s ratings and rating processes. Information regarding certain affiliations that may exist between directors of MCO and rated entities, and between entities who hold ratings from MIS and have also publicly reported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com
under the heading “Investor Relations — Corporate Governance — Director and Shareholder Affiliation Policy.”
Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s Investors Service Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intended to be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, you represent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly or indirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as to the creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.
Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’s Overseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a Nationally Recognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by an entity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registered with the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.
MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any rating, agreed to pay to MJKK or MSFJ (as applicable) for ratings opinions and services rendered by it fees ranging from JPY125,000 to approximately JPY250,000,000.
MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.