Moody's lowers Outerstuff

Moody's Investors Service said it downgraded Outerstuff LLC's ratings, including its corporate family rating to B2 from B1, probability of default rating to B2-PD from B1-PD and its secured term loan rating to B3 (LGD 4) from B2 (LGD 4).

The ratings were placed on review for further downgrade, Moody's said.

The outlook also was changed to rating under review from stable, the agency said.

The downgrades reflect Outerstuff's weaker-than-expected profitability and credit metrics, Moody's said.

Despite reporting solid revenue growth in 2018, the company's profitability declined due to overall product mix changes, continued NFL royalty shortfalls, inventory clearance activities, international growth related investment and higher variable expenses related to increased sales volume, the agency said.

When combined with retail customer bankruptcies, store closures and delayed timing of new business awards, both revenue and earnings declined in the first quarter of 2019, Moody's said.

The ratings reflect Outerstuff's very weak credit metrics, small revenue scale, narrow product concentration in licensed children's sports apparel primarily in the United States and reliance on licensing arrangements from several sports leagues for a significant majority of revenue, the agency said.

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