S&P views Victoria's Secret negatively

S&P said it revised its outlook for Victoria's Secret & Co. to negative from stable and affirmed all its ratings, including the BB- issuer rating.

VS' fiscal year 2024 outlook was weaker than expected, particularly due to the delayed progress on its business turnaround strategy, the agency noted.

“We now forecast VS' S&P Global Ratings-adjusted leverage will remain near our 3x downside trigger over the next 12-18 months due to its lower EBITDA generation. The company's S&P Global Ratings-adjusted EBITDA declined by 17% year over year in fiscal year 2023, which increased its leverage by half a turn to 2.9x. We attribute this decline in VS' EBITDA to its elevated spending on marketing and technology initiatives, restructuring costs, and acquisition-related expenses amid its ongoing sales declines,” S&P said in a statement.

The agency said it expects VS’ leverage to top out at 3x in fiscal year 2024 and stay in the high 2x area going forward.

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