Moody’s cuts Container Store

Moody's Investors Service said it downgraded the Container Store, Inc.'s corporate family rating to B3 from B2, its probability of default rating to B3-PD from B2-PD and its senior secured term loan to B3 from B2. Its speculative grade liquidity rating remains SGL-3.

“The downgrades reflect Container Store's weaker-than-expected sales and EBITDA in the third quarter of fiscal 2023 as reflected by a year over year revenue decline of approximately 15%. This weak performance followed the company's reduced financial guidance for the second half of the year in late October 2023 and it weak operating performance in the first half of 2023. Tepid demand in its product categories, particularly general merchandise, continues to weigh on its operating performance with sales down approximately 19% through the first 9 months of fiscal 2023.

“Moody's expects continued comparable store sales weakness and margin compression for the remainder of the fiscal year with EBITDA-Capex/interest falling to 0.8x at year 2023 from 1.5x at year 2022 and debt/EBITDA increasing to 3.9x from 2.7x over the same period,” the agency said in a press release.

The outlook remains stable.

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