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Retail sector may see more defaults in 2018 than 2017, S&P cautions

The U.S. retail sector is likely to see as many — or even more — defaults this year as the 11 recorded in 2017, as many companies are still struggling with high debt loads taken on in a leveraged-buyout boom in the last decade, S&P Global Ratings said Thursday.

Others have failed to move fast enough to build out their e-commerce capabilities to compete with juggernaut Amazon.com Inc. AMZN, -1.26% and adapt to changing shopping habits, the agency said in a new report.

“We are now beyond the tipping point we noted in February 2017 for defaults and expect adverse secular trends to continue for issuers in the retail subsectors that have been especially challenging — department stores, specialty apparel, and regional grocery,” analysts led by Robert Schulz wrote in the report.

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