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Moody's ups Collective Brands outlook to stable
Moody's Investors Service said it revised Collective Brands, Inc.'s outlook to stable from negative and affirmed the company's B1 corporate family and probability of default ratings.
The outlook revision to stable reflects Moody's view that Collective Brands' will be able to sustain its improved profitability and lower leverage despite the continued weak demand environment, the agency said.
Also considered is the company's announcement that it settled pending litigation claims with adidas America, Inc., the agency added.
Despite a four percent loss on its top line over the past fiscal year, Collective Brands' good expense and inventory management resulted in record free cash flow and absolute debt reduction, the agency said, stating that debt/EBITDA is now at about 5.5 times and Moody's expects it will decline further as the company's profitability continues to benefit from operating cost controls and positive sales momentum.
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