--Foreign currency Issuer Default Rating (IDR) at 'BBB';

--Local currency IDR at 'BBB';

--Long-term national scale rating at 'AA-(Chl)';

--Short-term national scale rating at 'F1+(Chl)'.

Undefined Capital Structure Under New Owner:

The maintenance of D&S' ratings on Rating Watch Evolving reflects the still unclear operating and financial strategy under the new controlling ownership of Wal-Mart Stores, Inc. (Wal-Mart, IDR 'AA'; Outlook Stable by Fitch), which controls 74.55% of D&S. Since acquired last December, D&S and Wal-Mart are currently evaluating different options related to its capital structure as part of the five-year plan. D&S' management expects to have them resolved by the end of October 2009. Fitch's main concerns are unresolved issues related to D&S' capital structure, source of financing, and unclear business plan including capital expenditures. Fitch expects to see some type of financial support from Wal-Mart to improve D&S' credit metrics which currently are high for the rating categories.

Leverage High and Negative Free Cash Flow:

D&S' leverage has been steadily increasing and is high and had negative free cash flow. Leverage, as measured by net debt/EBITDAR, was 4.7 times (x) by the end of June 2009, an increase from 3.5x by the end of December 2007. D&S' total consolidated debt amount (on-balance and off-balance debt) was USD1,467 million by the end of June 2009. The company's on-balance debt amount was USD1,267 million, and it was composed mostly by public debt (USD580 million), term loans with banks (USD362 million); and, revolving credit facilities (USD303 million). D&S' off-balance debt associated with operating leases obligations was low at USD200 million by the end of June 2009.

D&S' free cash flow (internal liquidity source) has been negative during the last years due to increasing working capital needs and high levels of capital expenditures. For the latest 12 months (LTM) period, ending June 2009, company's free cash flow (FCF) was negative USD183 million. The main driver for the increase in working capital during the last four quarters has been the growth of D&S' financial service business (private label credit card), called Presto, and the capital expenditures were primarily for the opening of new stores. During the LTM period D&S opened 62 new stores, increasing its square sale area in 10.14%.