Friendly Ice Cream is suffering from weaker-than-anticipated sales results and has had its corporate credit rating changed from positive to negative by Standard & Poor's. Kristi Broderick, an S&P analyst, said, "Weak results were due to higher costs on the commodities front on ice cream and vanilla and reduced traffic in the late night segment." Paul Hoagland, cfo at Friendly Ice Cream, did not return calls.
Despite these problems, the Wilbraham, Mass.-based company is on schedule to repay its debt. The company has a $35 million revolver with Bank of America,Citizens Bank and Bank North. It also has $175 million of 8 3/8% senior notes due 2012. Friendly Ice Cream will still have "a few more challenging quarters, but they still have a solid presence in family dining and customer loyalty in the Northeast quarter," Broderick concluded. In the second and third quarters of 2004, Friendly showed negative comparable-store sales which fell 3% in the second quarter and 1.7 % in the third quarter of 2004.