S&P views Wolverine World negatively

S&P said it revised Wolverine World Wide Inc.’s outlook to negative from stable and affirmed all its ratings, including the BB- senior unsecured note ratings.

Environmental legal settlement charges and share buybacks pushed the company’s leverage to 5.2x at the end of the first quarter on April 2 from 4x at Dec. 31.

“The outlook revision reflects little cushion in Wolverine's ratings to absorb potential declines in its operating performance given its elevated leverage. The company recently announced an additional $30 million of legal settlement costs related to its water contamination sites in its legacy leather tannery site in Michigan. This came at a time when the company's leverage was already elevated and close to our downgrade trigger of 4x due to its debt-funded acquisition of Sweaty Betty late last year. In addition, the company's financial policy continues to be aggressive,” S&P said in a press release.

The outlook indicates the potential for a downgrade if leverage stays elevated and does not improve to under 4x by the end of the fiscal year ending January 2023 due to weak consumer demand, inability to maintain profitability from cost inflation, or a more aggressive financial policy, the agency said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.