S&P cuts RugsUSA

S&P said it downgraded its ratings for Runner Buyer Inc. (RugsUSA) and its revolving facility and term loan to B- from B. The 3 recovery rating on the facilities remains unchanged.

“The downgrade reflects RugsUSA's high leverage amid the difficult operating conditions this year. The company's year-over-year sales decreased during the first quarter ended March 31, 2022, because it lapped its strong performance during the same period in 2021 when elevated government stimulus and excess savings led to heightened demand,” the agency said in a press release.

“We anticipate weaker margins in 2022 than during the height of the pandemic. In the first quarter, RugsUSA's S&P Global Ratings-adjusted EBITDA decreased by more than 20% year over year due to higher ocean freight costs. We believe there is a risk of further operating margin compression due to continuing elevated cost inflation and low consumer confidence,” S&P said.

The outlook remains stable.

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