Rodan&Fields' performance fell short of our expectations during the recent quarter because of intensifying competition in the skin care industry and reduced consultant enrollment. This has resulted in weaker sales, margin erosion, and deterioration of credit measures. We expect the company will continue to face topline pressures during the remainder of 2018 and into 2019, and we forecast further deterioration of credit measures, including leverage exceeding 3x. We revised our outlook on Rodan&Fields to negative from stable and affirmed all of its ratings, including the 'BB-' issuer credit rating. The negative outlook reflects the risk that the company will fail to stabilize its declining sales and margins and that leverage will increase toward high-3x area. The
