Moody's affirms Kellwood

Moody's Investors Service said it affirmed Kellwood Co.'s Ba2 corporate family and probability-of-default ratings and its Ba3 (LGD5, 70%) senior unsecured notes.

The outlook remains negative.

The agency said that as the company acquires brands that compete at better price points, the increased fashion risk could introduce higher volatility to sales and profitability. In addition, Kellwood's operating and credit metrics remain weak relative to its rating category in part due to execution challenges in its new product launches and, to a lesser degree, because of non-renewal (or sale to the licensor) of licenses in some product categories, Moody's added..

The negative outlook reflects the agency's concern that the Kellwood's operating margin may remain pressured, particularly within the company's moderately priced brands, as a result of increased retail consolidation.

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