Fitch revises Kohl's outlook to negative

Fitch Ratings has affirmed Kohl's Corp.'s long-term issuer default and senior unsecured ratings at BBB-, and revised the outlook to negative from stable.

“The outlook revision reflects Fitch's reduced confidence in Kohl's execution abilities following a challenging 2022 characterized by softening spending on discretionary categories like apparel and home, and management mis-execution, particularly around excess inventory, resulting in a significant deterioration in EBITDA,” the agency said in a press release.

Fitch noted Kohl’s EBITDA plunged around 65% in 2022 to $820 million from $2 billion in pre-pandemic 2019. Though, the agency said it anticipates EBITDA rebounding in 2023, the retailer would need to nearly double its EBITDA and lower its adjusted leverage under 3x to support the BBB- rating.

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