Fitch cuts Capri Holdings

Fitch Ratings said it downgraded Capri Holdings Ltd.’s ratings, including its long-term issuer default rating to BB+ from BBB- and its unsecured credit facility and debt rating to BB+/RR4 from BBB-. the outlook is negative.

“The downgrade and negative outlook reflect a significant business interruption from the coronavirus pandemic, and the implications of a downturn in global discretionary spending that Fitch expects could extend well into 2021,” said Fitch in a press release.

Fitch said it expects a sharp increase in adjusted leverage (adjusted debt/EBITDAR, capitalizing leases at 8x) to around 6x in fiscal 2021 (ending March 2021), from a high 3x range in fiscal 2019 and previously expected in fiscal 2020, before the coronavirus outbreak, which effects Capri’s fourth-quarter results, based on EBITDA declining to around $500 million from about $1.2 billion in 2018.

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