Moody’s lowers Elizabeth Arden, debt

Moody's Investors Service said it downgraded the ratings of Elizabeth Arden, Inc., including its corporate family rating to B2 from B1, probability of default rating to B2-PD from B1-PD and senior unsecured debt rating to B3 from B2.

This concludes the review for downgrade initiated on Aug. 19 following Elizabeth Arden’s announced partnership with Rhone Group LLC.

The outlook is negative. Elizabeth Arden’s speculative-grade liquidity was affirmed at SGL-3.

Moody’s said the downgrade reflects recent deterioration in the company's credit metrics due to a challenging operating environment in the fragrance category, Elizabeth Arden’s increased leverage due to poor performance related to volatility in certain of its celebrity fragrances and changes underway in its distribution structure.

The agency expects that debt to EBITDA leverage (incorporating its standard adjustments) will remain above 5 times over the next two years even after cost cuts take effect. The adjustment for rent is material relative to the company's funded debt.

The negative outlook reflects Moody's concerns that Elizabeth Arden will be able to stabilize its business operations in a timely manner, and restore its credit profile to be more comfortably positioned in the B2 rating category, the agency said.

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