S&P revises Fairway to negative

Standard & Poor's said it revised its outlook on Fairway Group Holdings Corp. to negative from stable and affirmed its B- corporate credit rating on the company.

At the same time, the agency affirmed its B- issue-level ratings on Fairway's $40 million 2017 revolver and $275 million 2018 term loan. The recovery rating was revised to 4 from 3, reflecting an expectation for average recovery in the event of payment default in the upper half of the 30% to 50% range.

S&P said the outlook revision reflects continued weak operating results, as competitors including Whole Foods continue to take market share specifically from the company's flagship Upper East Side location.

Amid eroding profitability and free cash flow generation, Fairway has also had to scale back on formerly aggressive expansion plans related to a high-growth strategy, the agency believes in part to reduce capital spending and preserve cash for debt repayment.

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