Fitch upgrades Macy's

Fitch Ratings said it upgraded the long-term issuer default ratings for Macy's Inc., Macy's Retail Holdings, LLC. (MRH) and Macy's Inventory Funding LLC to BB+ from BB.

“The upgrade reflects Macy's improving topline trajectory and strong cost reduction. Fitch projects 2021 EBITDA to be at or above $2.5 billion on significantly improved EBITDA margin at 10.4% versus 8.6% pre-pandemic. Fitch expects EBITDA beginning 2022 to be around $2 billion on EBITDA margin of 8% on more normalized gross margins, and SG&A increases relative to 2021 to support investments in its omnichannel initiatives,” the agency said in a press release.

Fitch also noted Macy's redemption of its $1.3 billion in senior secured notes has bolstered its confidence in Macy's ability to sustain adjusted leverage under 3x.

The outlook is stable.

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