S&P cuts Fossil Group

S&P said it downgraded Fossil Group Inc. to B from B+ and the rating on its $200 million term loan to B+ from BB-. The recovery rating remains 2 and reflects the expectation for substantial (70%-90%, rounded estimate 70%) recovery in the event of a payment default.

“The downgrade reflects our belief that credit metrics will severely deteriorate due to difficult operating conditions amid the Covid-19 pandemic and recession. We expect Fossil Group Inc.’s top line and EBITDA to sharply decline this year because the company and many of its wholesale customers have closed their retail stores, in addition to soft consumer demand for traditional and connected watches and other discretionary products,” the agency said in a press release.

S&P placed all the company’s ratings on CreditWatch with negative implications.

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