S&P Global Ratings raised its debt ratings outlook for Great Outdoors Group LLC, the parent of Bass Pro and Cabela’s due to a “better than expected” performance in the first quarter and expectations that improving manufacturing margins and reduced tariff pressure will boost credit metrics. Great Outdoors’ sales grew in the mid-single digits in the first quarter.
The upward revision comes despite S&P’s expectation that consumer discretionary spending will “remain relatively weak” in 2026.
The rating agency revised its outlook on Great Outdoors to stable from negative and affirmed all of its ratings on the company, including the ‘BB-’ issuer credit rating. The stable outlook reflects S&P’s expectation that Great Outdoors’ S&P Global Ratings-adjusted leverage will remain below 5x, supported by improving EBITDA margins. Additionally, it expects the company will generate consistent free operating cash flow (FOCF) over the next 12 months.
S&P said in its analysis, “Our outlook reflects our expectation for operating performance improvement over the next 12 months. Great Outdoors increased revenue in the mid-single-digit percent area in the first quarter (ended March 28, 2026) compared with the prior-year quarter due to improving customer demand for core product offerings, such as its fishing segment. Although we expect discretionary spending–particularly among lower-income consumers–will remain soft through the end of 2026, we forecast full-year sales expansion in the low-single-digit percent area due to new store openings and improving sales momentum across all segments.
“We forecast S&P Global Ratings-adjusted leverage will decline to roughly 4.4x in fiscal 2026, compared with 4.9x in fiscal 2025, driven by EBITDA growth, debt amortization, and balance sheet cash. We expect S&P Global Ratings-adjusted EBITDA margins to improve modestly by about 40 basis points in fiscal 2026, supported by disciplined cost management and higher year-over-year manufacturing margins. Easing tariff pressures over the next year should provide an additional, albeit modest, tailwind to margins, given the company’s exposure to imported merchandise and components. Lower duties will likely reduce input cost pressure and support some recovery in gross margins, particularly where prior increases were only partially passed through to customers. Additionally, the company’s balance sheet strength remains a key driver of deleveraging. We expect the company to hold meaningful cash by the end of 2026, which we net against adjusted debt in our calculations.
“We assess business risk as fair due to the company’s competitive position. Great Outdoors generates roughly $8 billion in sales annually, with more than 170 large-format retail stores. It benefits from a vertically integrated operating model that combines retail banners such as Bass Pro Shops and Cabela’s with owned-brand products and a portfolio of destination retail and hospitality assets. This structure supports differentiated customer engagement and brand loyalty, particularly in core categories such as hunting, fishing, and boating, while enabling greater control over merchandising, pricing, and the end-to-end customer experience relative to more traditional sporting goods retailers. However, we believe the fair assessment reflects our longstanding view of the company’s addressable market as more limited and potentially volatile relative to other retailers. Additionally, we consider the company’s EBITDA margins to be broadly in-line with peers that are assessed as fair within our ratings universe.
“We expect Great Outdoors will maintain ample balance sheet cash over the next 12 months, while relying minimally on its asset-based lending (ABL) facility and generating consistent positive FOCF. As of March 28, 2026, the company reported combined cash and ABL availability of approximately $1.9 billion. While not incorporated into our base case, potential tariff reimbursements could provide an incremental tailwind to liquidity, enhancing financial flexibility to support growth initiatives.
“Although inventory appeared relatively tight as of the end of the first quarter of 2026, we expect Great Outdoors to build inventory in the near term to support upcoming seasonal demand, while managing product mix and purchasing. This should mitigate stockout risk, although it may temporarily increase working capital needs and weigh on FOCF generation. That said, the company’s efforts to right-size its inventory over the last year, particularly within boating, will likely improve working capital efficiency and cash flow.
“Great Outdoors faces no near-term debt maturities. Its $1.2 billion ABL facility matures in 2030, and its $4.915 billion senior secured term loan matures in 2032. Given this maturity profile and adequate liquidity position, we do not anticipate incremental debt issuance over the next 12 months. In addition, we view near-term acquisition activity as unlikely, as management remains focused on improving profitability within existing business lines, including its White River Marine segment.
“We expect steady growth in loyalty memberships and credit card sign-ups. In our view, Great Outdoors’ credit card and loyalty program provides a modest benefit to revenue visibility and customer retention, particularly given the company’s discretionary product offering. Through the program, customers earn points on purchases that can be redeemed for future discounts, alongside access to targeted promotions and offers, which supports customer engagement and drives repeat traffic across channels. The credit card business represents a small portion of total consolidated revenue, but it contributes a higher share of profitability. Thus, it provides a recurring, higher-margin income stream while also supporting customer retention and indirectly benefiting core retail sales.
“The stable outlook reflects our expectation that Great Outdoors’ S&P Global Ratings-adjusted leverage will remain below 5x, supported by improving EBITDA margins. Additionally, we expect the company will generate consistent FOCF over the next 12 months.”
Image courtesy Bass Pro
