S&P turns Gabe’s outlook to negative

S&P said it revised its outlook for Mountaineer Merger Corp. (Gabe’s) to negative from stable and affirmed all its ratings, including the B rating on its $200 million first-lien term loan.

“Gabe's reported a weak year-over-year performance in the first quarter of 2022 (ended April 30, 2022), including a 17% decline in its revenue due to a 21% drop in its comparable store sales given the tough comparison with its government stimulus-bolstered sales during the first quarter of 2021,” the agency said in a press release.

S&P said it forecasts Gabe's will report negative free operating cash flow of about $40 million in fiscal year 2022 as it battles higher operating costs, including freight and labor, and weaker consumer demand as it opens new stores, though at a slower pace than previously planned.

The negative outlook reflects the possibility of a downgrade within the next 12 months, the agency said.

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