Moody's pares Gap

Moody's Investors Service said it downgraded the Gap, Inc.'s senior unsecured notes to B1 from Ba3, its corporate family rating to Ba3 from Ba2, and its probability of default rating to Ba3-PD from Ba2-PD. The speculative grade liquidity rating remains unchanged at SGL-2.

"The downgrade reflects the weaker than expected operating performance and our expectation that credit metrics will remain weak as topline growth and margin expansion will be limited in the next 12 months due to continuing inflationary and competitive pressures," stated Mickey Chadha, a Moody's vice president, in a press release.

Furthermore, Moody’s noted that even with a substantial erosion in operating performance, the Gap continued buying back shares in 2022.

The outlook remains negative.

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