Moody's slices Wolverine

Moody's Investors Service said it downgraded Wolverine World Wide, Inc.'s ratings, including the corporate family rating to B3 from B1, the probability of default rating to B3-PD from B1-PD, and its senior unsecured global notes rating to Caa2 from B3. The outlook was changed to stable from negative. The SGL-3 speculative grade liquidity rating is unchanged.

The downgrades reflect Wolverine's ongoing steep revenue and earnings declines and Moody's expectations that the challenging retail environment will hinder the company's ability to realize significant near-term benefits from its turnaround efforts. Operating results have been weak in both the wholesale and direct-to-consumer channels and across most brands, reflecting sector-wide elevated markdown activity and reduction in wholesale orders, as well as Wolverine's specific inventory liquidation activity and underinvestment in brands and operations.

“Moody's-adjusted debt/EBITDA increased to 10.5x as of Sept. 30, 2023 (including standard adjustments for operating leases, pensions, the accounts receivable securitization program and tax repatriation liability) and EBITA/interest expense was 1x,” the agency said in a press release.

Wolverine’s earnings are forecasted to recover in 2024, which accounts for the stable outlook, with debt/EBITDA to decrease to mid-5x by the end of 2024, Moody’s said.

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