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Shares of Liz Claiborne (LIZ) are down 22.5% today after Standard & Poor's Ratings Services lowered its long-term corporate-credit and senior unsecured-debt ratings on the company, citing the weak retail environment.

Here's an excerpt of S&P's note:

Standard & Poor's Ratings Services said today that it lowered its long-term corporate credit and senior unsecured debt ratings on Liz Claiborne Inc. to 'BB-' from 'BB+. In addition, we revised the recovery rating on the company's EUR350 million 5% notes due 2013 to '5' from '4', indicating the expectation of modest (10%-30%) recovery in the event of a payment default, as a result of the company's contemplated asset-based facility (NYSEMKT:ABL) which will be secured by priority liens on certain assets...

"The negative outlook incorporates our expectation that Liz Claiborne's operating performance and credit measures will remain challenged for the near term, given the weak retail environment," noted Standard & Poor's credit analyst Susan Ding. Although we expect the company will reduce leverage with cash flow and that leverage would trend to 5x by year end, we could lower the ratings if the company cannot reduce leverage as planned and/or if leverage increases further. This could occur if revenues decline 12% for the full year, compared with an 8.5% decline for the 12 months ended September 2008, and operating margins fall to about 5 versus 6.8% at present.

"Although unlikely over the near term, if the company can successfully execute its new business strategy and improve credit measures, including reducing leverage to the 4.5x area, we could revise the outlook to stable," she continued.

Source: S&P Downgrade Sends Liz Claiborne Reeling