Credit rating service Standard & Poor's lowered its long-term credit rating on May Department Stores ( MAY) Tuesday, saying the company's debt-financed, $3.2 billion acquisition of 62 Marshall Field's and several Mervyn's stores from Target ( TGT) impairs its credit quality. S&P lowered May's long-term corporate credit rating to BBB from BBB+ but affirmed its A-2 short-term rating. The ratings were removed from S&P's credit watch, where they were placed on June 10 with "negative implications." Overall, the outlook for May is stable, S&P said. Tuesday's news follows a similar reduction on Monday from Moody's Investor Service on Monday. Shares of May were lately up 14 cents, or 0.5%, at $26.14. May said last month that it would buy the Marshall Field's chain, nine Mervyn's stores, three distribution centers and $600 million in credit card receivables from Target. At that time, Target announced a plan to buy back up to $3 billion of stock over the next three years. S&P said it expects May's leverage to increase substantially on a pro forma basis, even if some of the added debt is from Marshall Field's accounts receivable. It also noted that the acquisition benefits May's overall market-share expansion, most notably in Chicago, Detroit and Minneapolis. May will likely benefit from certain cost savings, S&P said, but it might need to make considerable investments to help beef up Marshall Field's lagging sales. Sales at Marshall Field's dropped 4% in 2003 to $2.5 billion, while pretax segment profit declined 21% to $107 million, according to Target's financial statements. S&P is concerned that sales improvement at Marshall Field's is potentially problematic. In addition, the credit rating company cited May's below-average sales and earnings performance overall relative to some of its peers in the past three years. In its latest first quarter, May posted a slight rise in profit to 24 cents a share, from 23 cents a share a year earlier. Net sales rose 3.1% to $2.96 billion.