Moody's ratings upgrades Spencer Spirit rate family rating to B1

Moody's ratings upgrades Spencer Spirit rate family rating to B1

Moody’s Completes Periodic Review of Spencer Spirit IH LLC’s Credit Rating
Moody’s Investors Service has completed a periodic review of Spencer Spirit IH LLC’s corporate family rating (CFR), confirming its current rating of B1 as of January 28, 2022. The review, conducted through a portfolio assessment on January 24, 2022, evaluated the company’s financial and operational profile against industry peers and relevant methodologies, but no rating action was taken during the process.

Spencer Spirit’s B1 rating reflects both strengths and constraints in its business model. Positively, the company has demonstrated consistent revenue growth in its Spirit Halloween division over 16 years and strong recent performance in Spencer Gifts, with 44% and 41% increases in average store sales and comparable store sales, respectively, for the quarter ending November 6, 2021. Additionally, its debt/EBITDA ratio of 1.6x is lower than similarly rated retail peers, and liquidity is expected to remain robust over the next 12–18 months, supported by high cash balances and minimal near-term debt maturities.

However, the rating is constrained by structural challenges. The company’s reliance on mall traffic and discretionary spending by 18–24-year-olds exposes it to retail sector headwinds. Furthermore, its business remains highly seasonal, with most earnings and cash flow concentrated in the third quarter. Moody’s also noted ongoing risks from the shift to online commerce and the need for continued investments in digital transformation, sustainability, and supply chain resilience.

The review did not involve a rating committee, and no changes to the B1 rating or outlook were made. Moody’s emphasized that future rating actions will depend on material changes in Spencer Spirit’s credit profile, including its ability to adapt to secular retail trends and maintain financial stability. Investors are advised to consult Moody’s official platform for real-time updates on the rating.

This periodic review underscores the balance between Spencer Spirit’s operational execution and the broader challenges facing mall-based retailers in an evolving market.

(https://finance.yahoo.com/news/spencer-spirit-ih-llc-moodys-145106457.html): Moody’s Investors Service, "Spencer Spirit IH LLC — Moody’s Announces Completion of Periodic Review," January 28, 2022.