S&P cuts Weight Watchers

Standard & Poor's said it lowered its corporate credit rating on Weight Watchers International Inc. to B- from B.

The outlook is stable.

At the same time, the agency lowered its rating on the company's first-lien revolver, term loan B-1 and term loan B-2 to B- from B+. The recovery rating on the first-lien facilities was revised to 4 from 2, indicating that lenders could expect average (30% to 50%, at the low end of the range) recovery in the event of a payment default.

"Our rating action on Weight Watchers reflects our forecast that the company will be unable to reverse the declining trends in revenue and profitability since 2012 over the next year," S&P credit analyst Peter Deluca said in a news release.

"We believe credit metrics will deteriorate significantly over the next year and be very weak, given our forecast for sales and margins to meaningfully decline in 2015. However, we forecast credit metrics will marginally improve in 2016 through debt reduction."

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