Moody’s upgrades Levi Strauss, notes

Moody's Investors Service said it upgraded Levi Strauss & Co.’s corporate family rating to Ba1 from Ba2 and probability of default to Ba1-PD from Ba2-PD.

The agency also upgraded the company's various senior unsecured notes to Ba2 from Ba3.

The outlook is stable. The SGL-1 speculative grade liquidity rating was affirmed.

Moody’s said the action considers Levi Strauss’ strong commitment to strong credit metrics and debt reduction, evidenced by the company's use of cash to reduce its funded debt load by over $500 million in the past two fiscal years.

The agency expects debt to continue to modestly fall in the next 12-18 months.

"Despite near-term challenges from the strengthening USD, the rating upgrade reflects our expectations that LS&Co will continue to deleverage over the next 12-18 months as it continues to reduce overall debt levels and achieves cost savings from its various productivity initiatives," Moody's vice president Scott Tuhy said in a news release.

“The rating upgrade reflects our expectations the company will continue to see benefits from investments in growth initiatives such as expanding its direct-to-consumer business and licensing smaller business, which will help margins over time as well.”

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