S&P Downgrades Fairway Group (FWM) to 'D' Amid Chapter 11 Filing

S&P Global Ratings lowered its corporate credit rating on Fairway Group Holdings Corp. (Nasdaq: FWM) to 'D' from 'CCC-'.

At the same time, we lowered our issue-level rating on the company's senior secured credit facility to 'D' from 'CC'. The recovery rating on these notes is '5', indicating our expectation of modest recovery, at the higher end of the 10% to 30% range. We will review this recovery rating in conjunction with our analysis of the company's proposed debtor-in-possession (DIP) facility in the coming weeks.

"The 'D' rating reflects Fairway's announcement today that it has filed for a Chapter 11 prepackaged bankruptcy agreement with certain creditors in order to reorganize," said credit analyst Declan Gargan.

In our view, Fairway's challenges reflect the heightened competitive environment in the New York City metropolitan area, which we do not expect to abate. In the third quarter (which is the most recent available), same-store sales declined 7.5%, driven by an 8.5% reduction in customer transactions, largely we believe a result of lost market share to Whole Foods' Upper East side location.

You May Also Be Interested In

• Lowe's (LOW) PT Lowered to $275 at Guggenheim
• Global S&P Futures mixed to up in premarket
• Advance Auto Parts (AAP) PT Lowered to $48 at DA Davidson Following 25% Selloff Post Q2 Results