Fitch Ratings has affirmed six EMEA non-food retail companies' ratings following the revision of its approach to treating leases in its analysis (see Appendix 1: Main Analytical Adjustments to the Corporate Rating Criteria published on 6 December2024).
Following the publication of our updated Corporate Rating Criteria and its Sector Navigators Addendum, we have moved to using companies' IFRS 16/ASC 842 reported lease liabilities to compute lease-adjusted leverage metrics for sectors, including Non-Food Retail, for which we apply lease adjusted credit metrics.
The revised criteria have no impact on the ratings and Outlooks of the entities listed below. Where appropriate, we have revised sensitivities, as listed in Rating Sensitivities.
Key Rating Drivers
For full key ratings drivers, see the following rating action commentaries (RAC):
Mobilux Group SCA (
Takko Holding Luxembourg 2 S.a.r.l. (
Peer Analysis
See relevant RAC.
Key Assumptions
See relevant RAC.
RATING SENSITIVITIES
Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
EBITDAR margin falling below 10% and further deterioration in the structural profitability of French operations
Deviation from current financial policy translating into net EBITDAR leverage above 2.5x
EBITDAR fixed-charge coverage trending below 2.5x on a sustained basis
Neutral-to-negative or volatile free cash flow (FCF) generation
Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
Structural improvement in profitability, with EBITDAR margin sustained above 13%, reflecting solid execution of the group's strategic objectives including improvements in profitability in
Positive and strengthening post-dividend FCF generation
Net EBITDAR leverage below 1.5x
EBITDAR fixed-charge coverage trending above 3.5x on a sustained basis
Factors That Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
Total adjusted net debt/operating EBITDAR above 2.5x
EBITDAR/gross interest paid + rents below 4.0x
Deterioration in organic sales growth and profit margins, with EBITDA margin below 6.5% and negative FCF margin, all on a sustained basis
Deviation from conservative financial policy not compensated by asset disposals or other forms of external support, leading to tightening liquidity
Factors That Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
Total adjusted net debt/operating EBITDAR below 2.0x
EBITDAR/gross interest paid + rents above 4.5x on a sustained basis
Strengthening of EBITDA margin to above 7% and continuing positive FCF, all on a sustained basis
Solid strategy execution alongside a conservative financial structure, continuous strengthening of corporate governance and enhanced information disclosure
Factors that Could, Individually or Collectively, lead to Negative Rating Action/Downgrade
Decline in profitability and like-for-like sales, for example, due to increased competition or a poor business mix, with EBITDA margin remaining below 2%
EBITDAR fixed-charge coverage below 1.6x
EBITDAR net leverage consistently above 3.5x
Mostly negative FCF
Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
Improved profitability and like-for-like sales, for example, due to a strengthened competitive position or an improved business mix, with Fitch-defined EBITDA margin sustained above 2.5%
EBITDAR net leverage consistently below 2.5x
EBITDAR fixed-charge coverage above 2.0x
Neutral to marginally positive FCF generation and improved cash flow conversion leading to lower year on year trade WC volatility
Mobilux Group SCA
Factors That Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
Sharp deterioration in revenue and profitability, reflecting, for example, an increasingly competitive operating environment translating into an EBITDAR margin consistently below 10.0%
EBITDAR fixed charge coverage below 2.0x on a sustained basis
FCF margin trending towards neutral
Inability to reduce EBITDAR gross leverage to below 4.5x in the next 12-18 months
Evidence of tightening liquidity due to material operational underperformance or significant distributions to shareholders increasing leverage
Factors That Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
Wider geographic diversification leading to higher EBITDAR of at least
Commitment to a financial policy conducive to EBITDAR gross leverage remaining below 3.0x
FCF margin above 3% on a sustained basis
EBITDAR margin improving towards 13.5%
EBITDAR fixed charge coverage consistently above 2.5x
Takko Holding Luxembourg 2 S.a.r.l.
Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
Deteriorating performance of the business, due to recessionary environment, competition or lack of cost control, leading to declining like-for-like sales and weaker EBITDAR
Reduced liquidity headroom (including availability of letters of credit) due to trading underperformance, aggressive financial policy, or more pronounced seasonality, requiring a regularly drawn revolving credit facility (RCF)
Sustained EBITDAR leverage over 4.5x
EBITDAR fixed-charge coverage weakening below 1.2x on a sustained basis
Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
Evidence in sustained like-for-like revenue growth improving to above
EBITDAR leverage falling below 3.5x
EBITDAR fixed-charge coverage above 1.7x on a sustained basis
Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade
Significant EBITDA decline, reflecting falling selling volumes and cost inflation, which cannot be offset by further cost-saving initiatives
EBITDAR fixed-charge coverage trending towards 1.0x on a sustained basis
EBITDAR leverage above 6.0x on a sustained basis
Negative FCF leading to tightening liquidity, with the RCF being constantly drawn
Lack of credible refinance solutions for the RCF and senior secured notes before
Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade
Visibility of sustained Fitch-adjusted EBITDA recovery to around
Positive FCF generation
EBITDAR fixed-charge coverage above 1.5x on a sustained basis
EBITDAR leverage below 4.5x on a sustained basis
Liquidity and Debt Structure
See relevant RAC.
Issuer Profile
See relevant RAC.
Summary of Financial Adjustments
See relevant RAC.
REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING
The principal sources of information used in the analysis are described in the Applicable Criteria.
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