CHICAGO (AP) — Fitch Ratings on Friday lowered its rating on Staples Inc. due to concerns about weak sales and margin trends for the office supply retailer.
Staples' sales have been falling for some time and it announced plans in March to close up to 225 stores by the end of next year to shift its emphasize to its online business.
Fitch said that the closings could stabilize or modestly improve store productivity trends. But it continues to have concerns about slowing sales as Staples faces increased competition from online retailers. Additionally, Staples plans to reinvest its savings from these moves into its prices, marketing and website but that may put pressure on the company's margins.
The rating agency lowered its long-term issuer default rating one notch to 'BBB-' from 'BBB', putting it at the bottom of investment grade status. The rating outlook is negative, which means it could be downgraded further in the future.
Shares fell 7 cents to $12.57 in afternoon trading Friday. Its shares have fallen more than 20 percent so far this year.