In light of a proposed debt restructuring announced earlier this month by Saks Global, S&P Global Ratings has downgraded the retailer from “CCC+” to “CC.” The financial ratings agency said that because the $600 million in financing from a majority of existing Saks bondholders involves “the planned exchange of its notes at a discount to par,” it is “tantamount to a default.”
“The negative outlook reflects that, upon the completion of the transaction, we expect to lower our issuer credit rating and issue-level ratings on Saks to ‘SD’ (selective default) or ‘D’ (default),” said S&P Analyst Frederico Carvalho in a blog post. “A disruption in Saks’ inventory flow has led to a pronounced deterioration in its operating performance and liquidity challenges. Overdue payments, borrowing base constraints and seasonal inventory building led to a decline in the availability under the company’s $1.8 billion asset-based lending (ABL) facility to $415 million as of Feb. 1, 2025.
“We believe the company’s market position will weaken as competitors with greater financial capacity expand their business operations,” Carvalho wrote.
Saks Global operates the Saks Fifth Avenue brand as well as Bergdorf Goodman and Neiman Marcus Group, the latter of which Saks acquired in December 2024 for $2.7 billion.
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