Moody's lowers Kellwood, view negative

Moody's Investors Service said it downgraded Kellwood Co.'s corporate family rating and senior unsecured rating to Ba2 from Ba1 and revised the outlook to negative from stable.

Moody's said the downgrades reflect Kellwood's repeated difficulties experienced in launching new products, ongoing weakness in its key dress business and expectation of continued weakness in operating results indicated by repeated restructuring charges and earnings surprises.

The ratings continue to be supported by the company's diversified brands and extensive distribution, the agency said.

Affected ratings include the $270 million senior unsecured notes to Ba2 from Ba1.

The agency noted ratings will continue to be supported by the expectation that Kellwood will continue to generate satisfactory free cash flow despite the announced restructuring and operating difficulties and by its diverse product offering and customer base, adding the ratings are constrained by the continued sales decline in the dress business, the continued weakness in popular to moderate apparel and the increased fashion risk as the company increases its reliance on better apparel.

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