We expect U.S.-based discount tool and equipment retailer Harbor Freight Tools USA Inc. ?s profitability will weaken in fiscal 2026 (ending July 2026) because of elevated costs from tariffs, leading to adjusted leverage increasing to 4.4x, about a turn higher than in 2025. We expect the company will have enough leverage metric cushion to execute its mitigation plan and manage the effect of elevated tariffs on its operating performance. Therefore, we affirmed all our ?BB-? ratings on the company, which includes our issuer credit rating, and removed them from CreditWatch, where they were placed with negative implications on April 16, 2025. The stable outlook on Harbor Freight reflects our expectation that adjusted leverage will peak at 4.4x in fiscal 2026
