S&P revises Smart & Final view to stable

S&P said it revised the outlook for Smart & Final Funding LLC (Smart & Final Grocery) to stable from negative and affirmed its ratings, including the B rating on its $340 million floating-rate term loan.

“The stable outlook reflects our view that SFG's operating results will likely moderate in 2021, but still support credit metrics below elevated pre-pandemic levels. Similar to other grocers, SFG reported significant operating improvement in 2020 on increased demand for food at home and other stock-up consumer trends during the Covid-19 pandemic,” S&P said in a press release.

The agency said it forecasts SFG’s adjusted EBITDA margin to normalize in the 6% area, but still ahead of the 4.2% in 2019 with its S&P Global Ratings-adjusted leverage to return to the low- to mid-5x area by the end of 2021.

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