Irving, Texas-based arts and crafts specialty retailer The Michaels Cos. Inc. faces extraordinarily challenging environment amid the COVID-19 outbreak. We are downgrading Michaels to 'B' from 'B+'. At the same time, we are lowering our issue-level rating on the company's term loan to 'B+' from 'BB-'. The '2' recovery rating is unchanged. We are also lowering our issue-level rating on the company's senior unsecured notes to 'CCC+' from 'B-'. The '6' recovery rating is unchanged. The negative outlook reflects the potential for a lower rating if Michaels underperforms our forecast because of prolonged social distancing norms or weaker-than-expected recovery. While the full impact of the outbreak is uncertain at this time, we expect revenues to be pressured throughout the year,
