Research Update: Mountaineer Merger Corp. (d/b/a Gabe's) Outlook Revised To Negative On Weak First-Quarter Results, Ratings Affirmed

Morgantown, W.Va.-based off-price retailer Mountaineer Merger Corp. (doing business as Gabe's) reported weaker-than-expected first-quarter results, including a 21% decline in its comparable store sales, a 240-basis point drop in its S&P Global Ratings-adjusted EBITDA margin, and significant cash burn that required it to borrow more than $50 million from its asset-based lending (ABL) facility during the quarter. Due to its higher operating costs and slowing consumer demand amid a weakening economic environment, we now expect the company will face constrained profitability and tightening liquidity through fiscal year 2022. Therefore, we revised our outlook on Gabe's to negative from stable and affirmed all of our ratings, including our 'B' issuer credit rating. The negative outlook reflects the potential we will lower

...- Morgantown, W.Va.-based off-price retailer Mountaineer Merger Corp. (doing business as Gabe's) reported weaker-than-expected first-quarter results, including a 21% decline in its comparable store sales, a 240-basis point drop in its S&P Global Ratings-adjusted EBITDA margin, and significant cash burn that required it to borrow more than $50 million from its asset-based lending (ABL) facility during the quarter. - Due to its higher operating costs and slowing consumer demand amid a weakening economic environment, we now expect the company will face constrained profitability and tightening liquidity through fiscal year 2022. - Therefore, we revised our outlook on Gabe's to negative from stable and affirmed all of our ratings, including our 'B' issuer credit rating. - The negative outlook reflects the potential we will lower our rating on the company over the next 12 months if it faces greater pressure than we currently forecast such that the rebound in its earnings and cash flow generation...

Research Update