Moody's upgrades Caleres

Moody's Investors Service said it upgraded Caleres, Inc.'s speculative grade liquidity rating to SGL-2 from SGL-3.

Moody's also said it affirmed the company's Ba2 corporate family rating, Ba2-PD probability of default rating and Ba3 (LGD 5) rating on its $200 million senior unsecured notes due 2023.

The outlook remains stable.

The change in the speculative grade liquidity rating to SGL-2 from SGL-3 reflects the maturity extension of its asset based revolving credit facility to January 2024 from December 2019, albeit with a smaller capacity of $500 million down from $600 million.

The ratings reflect an expectation that revolver repayment will drive an improvement in Caleres' leverage and interest coverage over the next 18 months to levels that are in line with a Ba2 corporate family rating, Moody's said.

However, the increase in share repurchases and the corresponding slower-than-anticipated revolver repayment will modestly delay the pace of credit metric improvement, the agency said.

The ratings reflect the company's recognized brands, solid execution and geographic diversification, Moody's said.

The ratings are constrained by its low margins relative to specialty retail peers, narrow product focus and sensitivity to shifts in fashion and consumer discretionary spending, the agency said.

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