Moody's upgrades Wolverine

Moody's Investors Service said it upgraded Wolverine World Wide, Inc.'s corporate family rating to Ba2 from Ba3, probability of default rating to Ba2-PD from Ba3-PD and $375 million senior notes due 2020 to Ba3 (LGD5) from B2 (LGD5). The speculative grade liquidity rating was affirmed at SGL-1. The outlook is stable.

“The upgrade reflects Wolverine's continued meaningful reduction in debt with net debt falling below $900 million at the end of the second quarter of 2014, its lowest level since the October 2012 acquisition of the Performance+Lifestyle Group,” Moody's vice president Scott Tuhy said in an agency news release.

The upgrade also considers the positive impact anticipated from the company's recently announced strategic realignment plan, which is expected to result in the closure of up to 140 retail stores, mostly under the Stride Rite brand. The agency said the initiative is likely to result in improved returns on capital and incremental funding of the company's continuing omni-channel initiatives.

Wolverine's Ba2 corporate family rating reflects its meaningful scale in the global footwear industry and sizable portfolio of brands that have appeal to a broad range of consumer needs, Moody’s said.

The agency said the ratings are constrained by the narrow product focus of the company in the footwear segment and that certain brands such as Sperry Top-Sider have a greater degree of fashion risk.

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