Moody's affirms St. John Knits

Moody's Investors Service said it affirmed St. John Knits International Inc.'s B1 corporate family rating, B2 probability-of-default rating, B1 $45 million first-lien revolving credit facility (LGD3, 31%) and B1 $185 million first-lien term loan (LGD 3, 31%) following its review of the company's recent operating performance.

The outlook remains negative.

The agency said St. John Knits' ratings reflect the company's strong brand identity in the luxury women's apparel market and its high customer loyalty, which appears to have been retained notwithstanding the negative reaction to changes in fit and style undertaken in the company's spring 2006 line.

The ratings also reflect the company's high dependence on the St. John's name and image, the relatively small scale of the company in the apparel industry and its reliance on three major high end department stores for a significant portion of revenues, Moody's said.

The outlook remains negative based on the agency's concerns that the company's recovery from its fashion miscues in 2006 may take longer than anticipated.

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