S&P downgrades Payless

S&P said it lowered the corporate credit rating on Payless Inc. to CCC from B-.

The outlook is negative.

The agency also said it lowered the ratings on the company's $80 million first-lien tranche A-1 term loan to B- from B+.

The 1 recovery rating is unchanged, indicating 90% to 100% expected default recovery.

S&P said it lowered the rating on the company's $200 million first-lien tranche A-2 term loan to CCC- from B- and revised the recovery rating to 5 from 4, indicating 10% to 30% expected default recovery.

The downgrades reflect the company's sustained weak operating performance trends, intensified by supply chain issues following the bankruptcy in 2017, which led to a sharp decline in same-store sales and an increase in markdowns in recent quarters, the agency said.

S&P said it expects the company's performance will remain challenged over the next 12 months resulting in further weakening of liquidity through cash burn.

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