Fitch revises Capri view to negative

Fitch Ratings said it changed the outlooks for Capri Holdings Ltd. and Michael Kors (USA), Inc. to negative from stable.

“The outlook revision reflects concerns that weaker-than-expected topline trends, combined with lower-than-expected debt reduction, could combine to yield adjusted debt/EBITDAR (capitalizing leases at 8x) sustained above the low-3x range, which is Fitch's downgrade sensitivity, over the next 18 to 24 months. Stabilization of the rating would require increased confidence that Capri can meaningfully improve adjusted debt/EBITDAR from the forecasted 3.9x level in 2019 to the low 3x range in 2020 through a combination of debt reduction and EBITDA breaking out of its recent $1.1 billion to $1.2 billion range,” said Fitch in a press release.

Fitch also affirmed the BBB- ratings on Capri and Michael Kors.

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