Fitch alters Very Group view to stable

Fitch Ratings said it revised the Very Group Ltd.'s (TVG) outlook to stable from positive and affirmed the retailer's B- long-term issuer default rating. Additionally, the agency affirmed the £575 million of senior secured notes issued by the Very Group Funding plc at B-/RR4.

“The outlook revision to stable from positive reflects Fitch's expectation that the potentially subdued consumer environment of 2022-2023 should lead to weaker earnings, thus making Fitch's previous expectation of deleveraging below 7x within the rating horizon less realistic. While TVG benefits from a lean cost structure, due to its online only business model, cost pressures related to raw materials, energy, and logistics are likely to drive profit margin softness in fiscal year 2023 (YE June 2023), as well as marginally negative free cash flow (FCF) after expected dividend payments and capital expenditure,” the agency said in a press release.

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