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Bond Market News
Kohl’s Downgraded to BB- By S&P
December 20, 2024
Kohl’s Corp. was downgraded by a notch to BB- from BB by S&P. The downgrade comes after the company reported weaker-than-expected earnings for 3Q2024 and revised the full-year outlook downward. As a result, S&P expects Kohl’s leverage to remain high in the mid-4x range over the next 12 months. The downgrade also reflects Kohl’s weaker free cash flow and increased borrowings on its revolving credit facility. Kohl’s has reduced capital expenditures to about $500mn in 2024 to preserve liquidity, but this is seen as insufficient to fully address ongoing challenges. The company is expected to generate only $200mn in free cash flow by end-2024, down significantly from $591mn in 2023. S&P’s outlook on Kohl’s remains negative, reflecting ongoing pressures on sales and profitability in the apparel sector.
Kohl’s bonds traded negative with its 7.25% 2029s at 97, yielding 8.07%.
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