Fitch Downgrades Linens 'n Things for Losses

CLIFTON, NJ-Fitch Ratings has downgraded its assessment of locally based Linens ‘n Things Inc., a home furnishings retailer with 580 stores across the US and Canada, due to “weak performance.” Fitch lowered its Issuer Default Rating to CCC from B-, its asset-based revolver to B-RR2 from B+RR2 and its senior secured notes to CCC-/RR5 from CCC/RR6, but has rated the company as “stable.”

In a statement Tuesday, Fitch says the company’s performance has resulted in worsening credit metrics and negative cash flow generation in an already challenging and competitive market. “As a result, the company is dependent on favorable business and market conditions to meet its financial commitments as it carries out the lengthy process of repositioning the business,” said Fitch in the statement. However, the rating firm acknowledged that Linens ‘n Things has near-term liquidity available to meet the company’s capital and debt service requirements, and has strong brand recognition as the number two home furnishings retailer. “The company’s sustainability is dependent on favorable business and market conditions, which Fitch views as a concern in light of the soft demand for home furnishings as well as the lengthy process of the company’s turnaround,” Fitch said in the statement.