S&P cuts Afflelou

S&P said it downgraded Afflelou to B- citing the effect of retail store closures in France and Spain.

“Afflelou will experience sharp declines in volumes sold, revenues, and EBITDA in 2020, in S&P’s view. As an optical retailer, Afflelou had to close its retail network in France and Spain this month--representing more than 90% of its total sales,” said S&P in a press release.

“Our assumption to date is that shops in France and Spain will remain closed for two-to-three months. Because Afflelou manages a network of franchises, it is likely to have to provide financial support of €10 million-€15 million to help franchises meet mandatory expenses, while facing a period with no revenues,” S&P said.

Afflelou decided to draw on its entire €30 million RCF this month. S&P said it considers this prudent and believes it will help the group withstand potential liquidity needs. Government financial help may be available.

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