Irving, Texas-based arts and crafts specialty retailer The Michaels Cos. Inc. (Michaels) is subject to an increasingly challenging arts&craft sector landscape amid economic uncertainty and tariff pressures, in our view. We are revising the outlook on Michaels to negative from stable and affirming the 'BB-' issuer credit rating. At the same time, we are affirming our 'BB+' issue-level rating, with a recovery rating of '1', on the company's term loan as well as our 'B' issue-level rating, with a recovery rating of '6', on the company's senior unsecured notes. The negative outlook reflects our view that tariff pressures are likely to intensify in the next 12 months, which may hinder profitability and cash flow generation. The outlook revision
