The Michaels Cos. Inc. Outlook Revised To Negative From Stable On Slowing Demand And Cost Pressures; 'B' Rating Affirmed - S&P Global Ratings’ Credit Research

The Michaels Cos. Inc. Outlook Revised To Negative From Stable On Slowing Demand And Cost Pressures; 'B' Rating Affirmed

The Michaels Cos. Inc. Outlook Revised To Negative From Stable On Slowing Demand And Cost Pressures; 'B' Rating Affirmed - S&P Global Ratings’ Credit Research
The Michaels Cos. Inc. Outlook Revised To Negative From Stable On Slowing Demand And Cost Pressures; 'B' Rating Affirmed
Published Jul 12, 2022
4 pages (1947 words) — Published Jul 12, 2022
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About This Report

  
Abstract:

We expect U.S.-based arts and crafts specialty retailer Michaels Cos. Inc.'s profitability to be pressured this year due to slowing consumer demand and elevated operating costs. We forecast S&P Global Ratings-adjusted leverage approaching 6x in 2022 and expect negligible levels of free operating cash flow (FOCF) this year, before a substantial improvement in 2023. We revised our rating outlook on the company to negative from stable and affirmed all of our ratings, including our 'B' issuer credit rating on the company. The negative outlook reflects the potential for a lower rating over the next 12 months if Michaels is unable to reverse declining sales and margin trends, straining FOCF generation and causing adjusted leverage to be sustained at about 6x.

  
Brief Excerpt:

...July 12, 2022 - We expect U.S.-based arts and crafts specialty retailer Michaels Cos. Inc.'s profitability to be pressured this year due to slowing consumer demand and elevated operating costs. We forecast S&P Global Ratings-adjusted leverage approaching 6x in 2022 and expect negligible levels of free operating cash flow (FOCF) this year, before a substantial improvement in 2023. - We revised our rating outlook on the company to negative from stable and affirmed all of our ratings, including our 'B' issuer credit rating on the company. - The negative outlook reflects the potential for a lower rating over the next 12 months if Michaels is unable to reverse declining sales and margin trends, straining FOCF generation and causing adjusted leverage to be sustained at about 6x. SAN FRANCISCO (S&P Global Ratings) July 12, 2022--S&P Global Ratings today took the rating actions listed above. The outlook revision reflects Michaels' weaker-than-expected operating results due to slowing demand and...

  
Report Type:

Ratings Action

Issuer
Michaels Cos. Inc. (The)
GICS
Specialty Stores (25504040)
Sector
Global Issuers
Country
United States
Region
United States
Format:
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Cite this Report

  
MLA:
S&P Global Ratings’ Credit Research. "The Michaels Cos. Inc. Outlook Revised To Negative From Stable On Slowing Demand And Cost Pressures; 'B' Rating Affirmed" Jul 12, 2022. Alacra Store. Nov 05, 2026. <http://www.alacrastore.com/s-and-p-credit-research/The-Michaels-Cos-Inc-Outlook-Revised-To-Negative-From-Stable-On-Slowing-Demand-And-Cost-Pressures-B-Rating-Affirmed-2865295>
  
APA:
S&P Global Ratings’ Credit Research. (). The Michaels Cos. Inc. Outlook Revised To Negative From Stable On Slowing Demand And Cost Pressures; 'B' Rating Affirmed Jul 12, 2022. New York, NY: Alacra Store. Retrieved Nov 05, 2026 from <http://www.alacrastore.com/s-and-p-credit-research/The-Michaels-Cos-Inc-Outlook-Revised-To-Negative-From-Stable-On-Slowing-Demand-And-Cost-Pressures-B-Rating-Affirmed-2865295>
  
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