Moody's lowers Ascena Retail

Moody's Investors Service said it downgraded Ascena Retail Group, Inc.'s corporate family rating to Ba3 from Ba2, probability of default rating to Ba3-PD from Ba2-PD and senior secured term loan rating to Ba3 (LGD 3) from Ba2 (LGS 3).

The speculative grade liquidity rating was affirmed at SGL-2.

The outlook remains stable.

The downgrades reflect the recent deterioration in Ascena's revenue and earnings, Moody's said, and the challenging apparel retail conditions.

This will result are unlikely to improve meaningfully in the next 12 to 24 months, the agency said.

High-single-digit decreases in traffic have been a key driver of Ascena's persistent mid-single-digit declines in same store sales, Moody's explained.

But the agency said it believes the ratings are well positioned in the Ba3 category and can withstand modest potential further earnings declines.

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