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Consumer companies had it rough last year

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Jan 16, 2024
Distressed consumer companies
Data: Moody's, S&P; Chart: Axios Visuals

Consumer discretionary companies recorded the most bankruptcies of any sector in 2023, according to S&P Global Market Intelligence.

Why it matters: The sector's rough patch persists, with a number of distressed companies across several consumer segments.

Details: There were 82 bankruptcies filed by consumer discretionary companies last year amid a tighter financing market and higher borrowing costs.

What we're watching: The above chart reflects companies with a C rating or above, but others on the list with B ratings and negative outlooks include...

  • Whole Earth Brands (B- from S&P; B3 from Moody's), Pabst Brewery parent Blue Ribbon (CCC from S&P; B3 from Moody's), Olaplex (B- from S&P), Conair (B- from S&P), and Del Monte Foods (B- from S&P).
  • Notably, S&P Global in November downgraded Franchise Group, the parent of Vitamin Shoppe, giving it a B- rating from B.
  • "We now expect lower profitability and weaker cash flow generation as well as for S&P Global Ratings-adjusted debt levels to stay higher than our previous expectations, all pressuring credit measures beyond our prior downgrade threshold," S&P Global says.

Of note: "Although investors expect the Federal Reserve to cut interest rates as early as March, companies will still have to contend with relatively high interest rates and robust wage growth in the near term," per S&P Global.

Distressed food and restaurant companies
Data: Moody's, S&P; Chart: Axios Visuals
Distressed retail and apparel companies
Data: Moody's, S&P; Chart: Axios Visuals
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