Editor's Note: This is a complimentary research excerpt from Retail Sector Head Brian McGough. For more information on our services, click here.
- "Ratings agency Standard & Poor’s has cut the debt rating of Target Corp. by one notch to 'A' from 'A+,' and the outlook is 'stable.'”
- "The agency said it expected a 'lingering effect' on customer traffic through the first half of 2014, adding too that expenses related to the breach are likely as well."
TAKEAWAY FROM HEDGEYE’S BRIAN MCGOUGH:
We rarely call out a ratings change by Standard & Poor's as newsworthy. But this is Target we're talking about here. There's nothing wrong with this downgrade as it's grounded in a real world event. (If you've been living under a rock the past 3-4 months, and don't know what we're referring to, click here.) But here's the problem: Target still does not see it. They don't get it. Its guidance for positive comps and gross margin improvement screams 'denial.'