S&P: Supervalu outlook negative

Standard & Poor's said it revised the outlook on Supervalu Inc. to negative from stable and affirmed its BB- corporate credit rating.

"This action reflects our expectation that Supervalu 's credit metrics will deteriorate further from weaker operating performance, despite plans to pay down outstanding debt by $700 million," S&P analyst Stella Kapur said in a statement. This will result in less cushion under the company's bank facility leverage covenant.

S&P said the rating reflects the company's participation in the highly competitive supermarket industry, its limited free operating cash flow given its sizable capital expenditure needs, its leveraged balance sheet and its older acquired store base compared with large industry peers.

The company's large scale, good market positions, broad geographic reach and format diversity partially mitigate those weaknesses, the agency said.

The negative outlook reflects expectations that the company will experience a meaningful deterioration in EBITDA this year, S&P said.

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