Moody’s Investors Service changed Kohl’s Corporation’s outlook to stable from negative. Moody’s affirmed Kohl’s senior unsecured rating at Baa2.
“The affirmation and change in outlook to stable reflect Kohl’s success in navigating its operating environment and returning its profitability and credit metrics to levels experienced prior to the pandemic,” said Moody’s.
Ratings Rationale
Moody’s stated, “Kohl’s Corporation’s Baa2 senior unsecured rating reflects its solid market position and scale with approximately $18 billion of net sales, its long term track record of innovative merchandising which includes a significant level of private label and exclusive merchandise, and its excellent liquidity. The rating is also supported by its conservative financial strategy, reflected by its preservation of capital at the onset of the pandemic, the repayment of approximately $544 million of debt as well as the recent replacement of its $1.5 billion secured revolving credit facility with a $1 billion unsecured revolving credit facility. The company reinstated its dividend, albeit at a lower level, and has restated share repurchases. Moody’s expects that Kohl’s financial strategy will remain conservative. The Baa2 reflects Moody’s view that Kohl’s valued oriented offering and off-mall format with its historical focus on cost discipline and inventory management will enable the company to compete effectively even during more challenging economic conditions.
“The stable outlook reflects Moody’s expectation that Kohl’s will sustain its profitability levels and maintain its market position as consumer spending normalizes and that its financial strategy will remain conservative.”
Photo courtesy Kohl’s
