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Moody’s lowers Fossil Group
Moody’s Investors Service said it downgraded Fossil Group, Inc.’s ratings, including its corporate family rating to B2 from Ba3; probability of default rating to B2-PD from Ba3-PD and senior secured term loan to B2 from Ba3. Moody’s also downgraded the company’s speculative grade liquidity rating to SGL-3 from SGL-1. The outlook is negative.
“The downgrade and negative outlook reflect the disruption caused by the rapid global spread of the coronavirus and the Fossil’s already weak operating performance related to declining traditional watch sales and challenges with older generation connected watches,” said Moody’s in a press release.
“Widespread temporary store closures and expected weaker discretionary consumer spending will likely lead to significant declines in revenue and earnings, pressuring free cash flow in 2020. While its recent bank amendment improved cushion under its term loan maximum total leverage covenant, Moody’s believe that compliance could become tenuous in a more prolonged or severe downturn scenario,” the agency said.
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