Moody's lowers AFC outlook to stable

Moody's Investors Service said it changed AFC Enterprises, Inc.'s outlook to stable from positive.

Concurrently, Moody's said it affirmed all the debt ratings of AFC, including its B1 corporate family rating and probability of default rating at B2, while upgrading the senior secured credit facilities rating to Ba3 from B1.

The outlook revision reflects Moody's view that an upgrade of AFC's ratings is now unlikely in the near term given that the positive momentum in performance supporting a positive outlook has recently subsided.

Factors indicating this change include: 1) weaker than expected top-line growth, primarily driven by still-negative same store sales growth, this arises from both more intense competition in the chicken quick service restaurant sector as well as lower discretionary income among AFCs customers due to adverse economic factors, 2) slower than expected store unit growth as a result of fewer new store openings and more under-performing restaurants being closed, 3) escalating margin pressure arising from food commodity inflation and labor cost increases, Moody's said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.