S&P: Charming Charlie on negative watch

Standard & Poor’s said it placed Charming Charlie LLC’s B- corporate credit rating and issue-level rating on its term loan on CreditWatch with negative implications.

The 3 recovery rating on the debt is unchanged.

The recovery expectations for the term loan are now in the lower half of the 30% to 50% range as a result of the new $60 million asset-based lending revolving credit facility.

The negative watch placement reflects a significant decline in profits as a result in a change in management’s business strategy and the possibility that performance trends will not reverse course, S&P said.

A change in merchandising and branding strategy that did not resonate well with customers, particularly in the company’s apparel offerings, accelerated its weak same-store sales trends, the agency said.

Same-store sales were less than expectations as declines accelerated to 18% in the third quarter, S&P said, compared with modestly positive sales in the previous year.

Operating performance is expected to remain weak in 2016, the agency added.

© 2015 Prospect News.
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