Germany-based beauty products retailer Kirk Beauty experienced an unexpected earnings and cash flow shortfall during the first nine months of fiscal 2018 on the back of a non-recurring inventory write-down, which led us to revise our base case. Free operating cash flow has (FOCF) turned negative and our adjusted debt to EBITDA is approaching 8x, so we view metrics for fiscal 2018 to be temporarily out of line with the current rating. We are revising our outlook on Kirk Beauty to negative from stable and affirming all our ratings, including our 'B' issuer credit rating. The negative outlook reflects that we could downgrade Kirk Beauty if like-for like sales growth in Germany is not restored, cost pressure continues, and the
