NEW YORK CITY, NY - Fairway Market has been hit yet again as its financial situation appears to be continuing in a downward spiral.
Already on probation with Nasdaq and in danger of being delisted, the chain’s debt has now been downgraded by Moody’s for a second time in the last six months.
“Fairway’s operating performance and liquidity continues to be weak and we expect the company to breach its financial covenants in the fourth quarter ending April 3, 2016,” Mickey Chadha, Moody’s Senior Analyst said in a Wednesday announcement, according to News Day.
Moody’s added that it expects “cash flow and profitability will continue to be strained as same store sales face continuing competitive pricing pressures,” according to the report, prompting it to downgrade Fairway’s $267 million loan and $40 million line of credit.
The company first cut back Fairway’s credit back in September, after a string of losses on the retailer’s part.
Sadly, while Fairway did not immediately respond to News Day’s request for comment, recent statements reflect that it does not totally disagree with Moody’s evaluation.
In its filing with the SEC regarding Nasdaq’s notice of delisting, the retailer stated that, despite remaining open to all options, it could not provide assurance that it will be able to regain compliance with the financial requirements.
In fact, as we previously reported, the company warned that it could be in danger of filing bankruptcy earlier this month due to difficulties in meeting financial obligations in April and having limited cash resources it hoped to have to open new locations to increase revenue.
Moody’s downgraded the chain’s corporate family debt rating from Caa1 to Caa2, according to the report, which its website lists as considered subject to very high credit risk. The number “2” following the new rating indicates that the debt ranks in the midrange of risk in that category, making loans more difficult or expensive for Fairway to obtain.
