Moody's cuts Tommy Hilfiger

Moody's Investors Service said it lowered the corporate family and senior debt ratings of Tommy Hilfiger U.S.A. to Ba2/(P)Ba2 from Ba1/(P)Ba1, and kept the ratings on review for possible further downgrade.

The downgrades reflect the company's weakening operating performance and debt metrics as derived from preliminary reports issued during 2005 indicating revenues and operating margin trends have been negative relative to prior periods, Moody's said.

Furthermore, Moody's said the company announced on Sept. 30 that it again delayed filing its statements for its last fiscal year ended March 2005. The lack of financial filings (the last quarterly filing was for the quarter ended June 2004) creates uncertainty over the core levels of operating metrics and whether the company can maintain this new rating level.

The ratings remain on review pending release of financial statements for fiscal year 2005 and subsequent periods, Moody's said. The ratings could be confirmed if Moody's determines that Tommy Hilfiger's growth in Europe is sustainable, that profitability is likely to rise above 8% and if the company renegotiates a longer term credit facility, Moody's said.

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