S&P lowers The Warnaco Group outlook to stable

Standard & Poor's said it revised its outlook on The Warnaco Group Inc.'s ratings to stable from positive.

At the same time, the ratings on Warnaco were affirmed, including its BB- corporate credit rating, the agency said.

S&P noted that the outlook revision follows the company's announcement that it will restate its financial statements for the fiscal year ended December 2005 and the first quarter of 2006 ended April 1 as a result of certain irregularities and errors related to its accounting for returns and vendor allowances at its Chaps menswear division.

The financial impact of these restatements will not significantly affect credit protection measures, S&P said.

However, the company needs to restate its financial statements due to accounting irregularities and an error related to the company's SAP implementation in its swimwear division, according to the agency, which noted that the ratings on Warnaco reflect its participation in a highly competitive and promotional retail environment, its concentration in the slower-growing department store channel and its exposure to fashion risk in some of its business segments.

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