Fitch downgrades Maxeda

Fitch Ratings said it downgraded Maxeda DIY Holding BV's long-term issuer default rating to B- from B.

“The downgrade reflects our expectation that, after peaking in the year to end-January 2024 (FY24) beyond the level consistent with a B IDR, Maxeda's deleveraging will be slow with leverage likely to remain high over the next three years. This is because of its high exposure to home building and decorating products, which we believe are likely to continue experiencing lower consumer demand and, possibly, deflation. Further savings initiatives to offset labor and rent increases may now also be more limited than in FY23, constraining the company's ability to support and improve profit margins,” Fitch said in a press release.

The agency said Maxeda will have “comfortable headroom” under a B- rating, citing its positive free cash flow generation and sufficient liquidity despite pressures expected on EBITDA due to unfavorable weather on gardening products, including garden furniture, plants, gardening tools and barbecues, one of the company’s largest product categories.

“In FY24, we project revenue to be 1.3% below FY23, while EBITDA will be lower by around €10 million,” Fitch said.

The outlook is stable.

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