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Moody's may downgrade Rafaella
Moody's Investors Service said it placed Rafaella Apparel Group, Inc.'s B2 corporate family and probability-of-default ratings and B3 senior secured notes due June 2011 on review for possible downgrade.
The agency said it acknowledges that Rafaella has significantly reduced debt and maintains adequate liquidity, but the review for possible downgrade was prompted by the recent announcement that fiscal 2008 revenue and earnings declined significantly due to lower volume and selling prices, increased customer allowances and markdown and a mix shift to lower-margined private-label business.
Moody's review will focus on the company's ability to stabilize revenue and earnings declines over the near-to-intermediate term in light of the currently difficult economic environment.
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