S&P lowers Men’s Wearhouse view to negative

Standard & Poor’s said it affirmed the B+ corporate credit rating on Men’s Wearhouse Inc.

The agency also said it revised the outlook to negative from stable.

S&P also said it affirmed the BB- rating on the term loan and B- rating on the unsecured notes. The 2 recovery rating on the term loan indicates 70% to 90% expected default recovery and the 6 recovery rating on the unsecured notes indicates 0 to 10% expected default recovery.

The outlook revision reflects the significant underperformance at Jos. A Bank and a view that a turnaround of the brand will be a gradual process, the agency said.

Jos. A Bank, which comprises about 25% of the company’s revenue base, has started to move away from its well-known promotions emphasizing bulk purchases to less aggressive promotions, S&P said. But this strategy has so far not been resonating well with consumers, the agency said.

Same-store sales at Jos. A. Bank have been deteriorating at an accelerated rate over the past several quarters and weak sales trends are expected to continue over the next 12 months, S&P said.

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