Moody’s Ratings downgraded its outlook on Great Outdoors Group (GAO), owner of Bass Pro, Cabela’s and White River Marine Group, to negative from stable. This change is driven by weaker-than-expected operating performance, primarily in its boating business.
The ratings agency said the weakness in the boat business is a “result of increased industry promotional activity amid soft consumer demand for boats as consumers remain cautious about relatively large discretionary purchases due to ongoing uncertainty from tariffs and persistently high interest rates which have raised borrowing costs for boat financing.”
Moody’s stated that the weakness has led to high financial leverage, with Moody’s adjusted debt-to-EBITDA ratio at 6.0x.
Moody’s affirmed Great Outdoors’ Ba3 corporate family rating (CFR), its Ba3-PD probability of default rating (PDR), and its B1 senior secured term loan rating. The affirmations reflect GAO’s “relatively stable interest coverage with EBITA to interest at 1.9x, as well as its very good liquidity. It also reflects “our belief that GAO will prioritize deleveraging through earnings growth supported by sustained cost reduction initiatives, ongoing productivity improvements and deeper penetration into its high margin owned brand portfolio,” stated Moody’s
Moody’s added that the affirmation also reflects “the company’s well-recognized brand names and its solid market position and operational execution.”
Moody’s said in its analysis, “GAO’s Ba3 CFR is supported by its well-recognized brand names and leading position in the outdoor recreational products retail sector. The company’s margins benefit from its sizable and stable credit card income stream and significant owned brand penetration. In addition, GAO’s business model as a destination experiential retailer sets it apart from mass-market and big-box competitors that do not provide the level of in-store customer service that is the foundation underpinning its loyal customer base. Further, its diverse product assortment and value price points somewhat mitigate earnings pressure in economic downturns.
“Partially offsetting these strengths are GAO’s elevated leverage with Moody’s adjusted debt to EBITDA of 6.0x for LTM ended June 28, 2025, up from 5.2x in fiscal 2024 and EBITA/interest at 1.9x from 2.2x for the same period. This deterioration in credit metrics reflects weaker earnings in the company’s boating and fishing/marine segments, although it was partially offset by continued growth in its credit card business. We expect operating performance to improve over the next 12 months, driven by increased penetration of GAO’s owned brands, along with continued focus on cost controls and productivity improvements. In addition, we recognize the company’s aggressive financial strategies, including the historic use of cash flow and incremental debt for the redemption of preferred and common equity interests, issued by GAO’s parent and member distributions, primarily for tax purposes. We expect the company to engage in opportunistic acquisitions, which could raise leverage.
“GAO has very good liquidity over the next 12 months, which is evidenced by its historically good free cash flow and a largely available $1.275 billion asset-based lending (“ABL”) facility that expires in 2030. As of June 28, 2025, the company had high unrestricted balance sheet cash and no near-term debt maturities,” continued the firm.
Moody’s said GAO generates in excess of $7.5 billion in annual revenue.
Image courtesy White River Marine Group
