Moody's lowers Ascena Retail

Moody's Investors Service said it downgraded Ascena Retail Group, Inc.'s corporate family rating to B1 from Ba3, probability of default rating to B1-PD from Ba3-PD and senior secured term loan rating to B1 (LGD 3) from Ba3 (LGD 3).

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

The outlook is stable.

The downgrades reflect Ascena's ongoing execution challenges and margin pressure, Moody's said.

While the company's forecast for a significant EBITDA decline in the third quarter of 2019 is to a large extent driven by temporary factors affecting the broader sector, Moody's said it expects company-specific weakness to continue.

The ratings reflect the company's large scale and diversified portfolio of women's apparel brands, the agency said.

Ascena's conservative financial policies and good liquidity over the next 12- to 18-months provide key credit support, including solid positive free cash flow, ample revolver availability and a lack of near term maturities, Moody's said.

The ratings are constrained by company-specific execution missteps and the broader challenge of achieving material earnings improvement with a portfolio of primarily mature, mid- and value-priced brands amid a highly competitive apparel retail environment, the agency said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.