Moody's Acknowledges Impact of Online Sales

Interesting article from Internet Retailer this week...

Moody’s Investors Service Inc., a major Wall Street credit-rating agency, announced today that it is giving greater weight to online sales in rating the debt of retailers.

“As online sales become a larger percentage of total sales for individual issuers, and as online spending gains a bigger share of overall retail spending, a retailer’s Internet strategy is becoming a more important factor in Moody’s credit analysis,” says vice president and senior credit officer Margaret Taylor. “A strong online presence is considered a ratings positive more frequently than in the past, because it represents such an important channel of distribution and can mitigate declining comparable-store sales trends.”
 . . .
Taylor gives several examples of how online sales have significantly impacted the results, and thus the credit ratings, of major retailers. For instance, she notes apparel retailer Gap Inc. softened the impact of a 4% decline in same-store sales in fiscal 2007 with 23.7% growth in online sales to $903 million, and chain J.C. Penney Co. Inc. partly offset flat comp-store sales with 15% growth in online sales to $1.5 billion.

This is interesting and important validation of the online channel for retailers.