Moody's downgrades Express, notes

Moody's Investors Service said it downgraded Express LLC's corporate family rating to Ba3 from Ba2, probability of default rating to Ba3-PD from Ba2-PD and the rating on the senior unsecured notes to B1 from Ba3.

The speculative-grade liquidity rating was affirmed at SGL-1.

The outlook remains stable.

Moody's said the downgrade reflects its expectation that Express will continue to face a highly competitive and promotional operating environment in the intermediate term, leading to lease-adjusted leverage sustained above 4 times, which in Moody's view is not appropriate for the Ba2 rating category considering the company's meaningful business risk as a fashion apparel retailer.

"We believe that the company's EBITDA declines during 2012 and 2013, as well as management guidance for 2014 reflect not only the temporary challenges of cold 2013-2014 winter weather and weak income growth of Express' target customer, but also the longer-term pressures of intense competition from fast fashion retailers and declining mall traffic," Moody's analyst Raya Sokolyanska said in a news release.

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