Moody's lowers Coach view to negative

Moody's Investors Service said it confirmed Coach Inc.'s Baa2 senior unsecured rating and changed the outlook to negative.

This concludes a review for possible downgrade of Coach's ratings that began in May when Coach announced that it will be acquiring Kate Spade and Co. for $2.8 billion, Moody's said.

While Coach's acquisition of Kate Spade is another step in its plan to broaden its customer and product base to a younger, trendier millennial shopper, the negative outlook reflects the enhanced execution, integration and business risks particularly in light of the secular shifts in the overall retail business environment, the agency said.

The acquisition also gives Coach additional product lines and expansion opportunities, but the ever-changing fashion trends and over promotion could result in slowing EBITDA growth for Coach, Moody's added.

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