Advance Auto Parts stock was on track for its lowest close in more than a decade after S&P Global Ratings lowered its credit rating on the auto parts retailer into junk territory.
S&P Global lowered Advance Auto’s rating by one notch to BB-plus, which is considered noninvestment grade, from BBB-minus on Tuesday. The company’s “strategic execution challenges have led to persistent underperformance, diminishing its competitive position and pressuring credit protection metrics,” S&P Global said in a news release.
Advance Auto has seen sales mostly flatline over the past 18 months, while its peers have seen an uptick, the ratings firm said. In turn, Advance “has ceded market share and its competitive standing in the industry has weakened,” S&P Global added. However, the firm still gave Advance Auto a stable outlook, as it expects sales and profitability to improve gradually.Advance Auto stock slid 5.8% to $58.
languished due to inconsistent execution.,” the firm wrote. “Furthermore, we believe the company’s misguided strategic decision to preserve and attempt to expand margins while its competitors invested in price has eroded its value
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