S&P cuts Michaels

S&P said it lowered the issuer credit rating on Michaels Cos. Inc. to B- from B. The outlook is negative.

At the same time, the agency lowered its issue-level ratings on the company's term loan and senior secured notes to B- from B. The 3 recovery rating is unchanged.

S&P also lowered the issue-level rating on the company's senior unsecured notes to CCC from CCC+. The 6 recovery rating is unchanged.

“U.S.-based creative products retailer The Michaels Cos. Inc.'s second-quarter performance was weak, with comparable store sales decreasing in the high-single-digit percentage area and freight costs severely hurting profitability,” S&P said in a news release.

“We expect leverage to be very high before improving in 2023 as freight pressure relief is offset by a weaker economic backdrop given our base case assumption of a shallow recession.”

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