S&P alters Fanactics outlook to negative

S&P said it revised its outlook for Fanatics Holdings Inc. and its subsidiaries Fanatics Commerce Intermediate Holdco LLC and Fanatics Collectible Intermediate Holdco Inc. to negative from stable.

“FHI's leverage is elevated due to weaker profitability and strategic investments. Fanatics Commerce reported roughly flat revenue growth in the second quarter (ended June 30, 2023) due to slowing consumer demand for its discretionary product offering. At the same time, Fanatics Collectibles reported revenue growth of 4% in its second quarter, and lowered its guidance for the year due to production delays and updated product launch schedules. In addition, both businesses experienced significant margin deterioration through the first half of fiscal 2023,” S&P said in a statement.

The weaker outlook reflects an expectation for leverage to stay near the mid-6x area through fiscal 2023 before declining to 4x and below in fiscal 2024.

Concurrently, S&P affirmed the BB- issuer ratings on FHI and its subsidiaries.

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