S&P Global Ratings revised its debt outlook on Foot Locker Inc. to stable from negative on better-than-expected results for fiscal 2020, resulting in leverage in the mid-1x area compared with S&P Global Ratings’ previous expectation of over 3x for 2020.
S&P said Foot Locker benefited from increased digital penetration, healthy demand in North America for casual/comfort apparel and basketball shoes and strong growth in its Asia Pacific segment despite the ongoing pandemic.
“We expect the company to maintain credit metrics at levels we consider appropriate for the current rating, including leverage below 2x in 2021 due to the healthy recovery in its top line and EBITDA margins,” S&P said in a press release. “Therefore, we revised our rating outlook on Foot Locker to stable from negative. We also affirmed all our ratings, including our ‘BB+’ issuer credit rating on the company.”
The stable outlook reflects S&P’s expectation that Foot Locker will continue to stabilize and improve its operating trends in 2021. S&P said,
“We expect the demand for the company’s products will remain healthy, in particular its basketball product lines, and that the company will continue to grow its digital channels and store-level productivity, leading to leverage remaining in the mid-to-high-1x range over the next year.”
Photo courtesy Foot Locker