S&P cuts Kohl’s to junk

S&P said it downgraded its ratings for Kohl’s Corp. and its senior unsecured debt to BB+ from BBB-. The agency assigned a 3 recovery rating, indicating meaningful (50%-70%; 65% rounded estimate) recovery in default.

“The downgrade reflects the secular headwinds we continue to associate with the highly competitive department store sector and our expectation that Kohl's operating performance will be weaker than our prior forecast with S&P Global Ratings lease-adjusted leverage at about 3.5x in 2022 before improving to around 3x in 2023,” the agency said in a press release.

The agency said it forecasts Kohl’s improving its cash flow to about $900 million in 2023 and expects it to repay its $275 million of senior unsecured notes, pushing its leverage down to around 3x.

The outlook is stable.

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