Standard & Poor’s has downgraded VF Corp., citing the high debt/Ebitda leverage of more than three times that will result from its planned $2.1 billion acquisition of Supreme. S&P thinks that a leverage of more than two times will persist at least until the fiscal year ending in March 2023, offsetting the strategic benefits of taking over such a cool streetwear brand. S&P recognized Supreme’s high margins and good cash flow, and indicated that there is a lot of room to build upon its small network of 12 stores, but noted that its revenue growth could be volatile. On the positive side, S&P expects VF to benefit from a healthy recovery in consumer spending in 2021 in the areas of outdoor, active and casual apparel. Anyhow, S&P has lowered VF’s issuer credit rating from A to A-, with a similar cut for its unsecured debt. It has removed VF from CreditWatch.

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