The global coronavirus pandemic is hard enough on healthy businesses, but it’s particularly difficult on companies that were already struggling.
For Macy’s, S&P said coronavirus has led to mass store closures and consumers are spending far less on discretionary merchandise — particularly in malls. Target noted Wednesday that its clothing sales were down 20% this month. S&P noted that Macy’s online business represents only 25% of the company’s sales.
S&P also said Ford’s recent draw-down of its credit facility is concerning, and suspension of its production will plunge its adjusted profit margin below 6%. Ford’s debt was right on the border of investment grade, but S&P said the downturn in demand for cars meant Ford’s debt should be considered junk.