S&P downgrades Elizabeth Arden

Standard & Poor's said it lowered Elizabeth Arden Inc.'s corporate credit rating to B+ from BB- and its senior subordinated debt to B from B+. The recovery rating on the debt remains 5.

The ratings were removed from CreditWatch, where they were placed with negative implications on May 8 following the company's downward earnings revision for the quarter ended in June, and the outlook is stable.

The agency said its downgrade is based on the company's higher leverage and weaker EBITDA margins, which S&P estimates were about 4.9 times and 6.4% in June, compared with 3.4 times and 10.1%, respectively, a year ago.

The ratings on Elizabeth Arden reflect the company's sales concentration in the highly competitive fragrance category, the seasonal nature of its core businesses and its relatively weak operating margins, S&P said.

The company benefits from its portfolio of well-known brands, solid market position in fragrance and its diverse distribution channels, the agency added.

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