Moody's lowers Albertson's

Moody's Investors Service said it lowered the ratings of Albertson's, Inc., including the senior unsecured long-term rating to Baa3 from Baa2 and the short-term rating to Prime-3 from Prime-2, and continued its review for possible downgrade.

The agency said the downgrade is based on the challenges that Albertson's faces in restoring its value proposition and its profitability in the face of fierce competition from Wal-Mart supercenters, traditional supermarket operators and a variety of other grocery retailers.

Moody's added the continuing review for possible downgrade reflects Albertson's announcement that it is exploring strategic alternatives to increase shareholder value, which could result in a company with a significantly different configuration and financial profile.

Albertson's ratings are based on the geographic diversity of its supermarkets and drug stores, its leading market share in some large trade areas like Chicago, its consistent generation of excess free cash flow and disciplined approach to cost cutting, Moody's said, adding the ratings also reflect the challenges that Albertson's is experiencing, relative to its direct peers, in bolstering market share and profitability in a competitive and price-promotional environment.

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