And Charming Shoppes Inc. and Quiksilver Inc. were right on trend Monday with new bank agreements worth hundreds of millions of dollars, as was Limited Brands Inc., which extended the early tender date in its offer to buy back nearly $300 million in debt.
Even in the case of Kellwood Co., which had a $140 million debt exchange which threatened the firm’s solvency last month, fashion companies have generally been able to borrow enough money to pay down prior obligations and begin the debt cycle anew.
It’s a marked change from last fall when credit markets screeched to a halt and an indication that investors and banks see the signs of stability in the economy as the real deal.
“What it is is a bet that maybe in the next 18 months we’ll see a turnaround,” said Tiffany Co, Fitch Ratings debt analyst. “People are kind of surprised in general that the market has been so receptive to new issuances [of debt] and nobody really can pinpoint the main reason for it.”
That the economy has not turned out to be as bad as some feared is likely part of it, said Co.
The U.S. economy shrank at an annual rate of 1 percent in the second quarter, a much slower decline than the first quarter’s 6.4 percent free fall, according to the government’s most-recent gross domestic product calculations. Stock markets have been more bullish, with retail stocks up 61.4 percent since their March 6 lows. The S&P Retail Index marched up 1.6 percent, or 5.57 points, to 360.20 Monday and the S&P 500 closed above 1,000, at 1,002.63, up 1.5 percent, marking its first four-digit close since Nov. 4. (For more on stocks, see page 14.)
Taking advantage of the refinancing window that’s opened hasn’t been without its costs, however.
“It seems like [credit markets] are being more rational than they had been through the credit boom or the credit crisis,” said Margaret Taylor, debt analyst at Moody’s Investors Service.
Taylor said the apparel world seems to have divided into two kinds of companies when it comes to refinancing: those that have to pay higher prices to refinance and those that have to both pay higher prices and accept tougher terms.
She noted companies finding easier refinancing in the bank market include “industry leaders or solid brand names or companies where there’s a comfort level that they will survive the recession.”
Neiman Marcus Inc. was able to trade on its standing in the luxury sector and refinance its $600 million credit agreement last month. On the other hand, Eddie Bauer Holdings Inc. had to refinance with tougher terms and ultimately filed for bankruptcy and was acquired by Golden Gate Capital.
On Monday, Charming Shoppes said it had been granted a three-year secured revolving $225 million credit facility, which replaced a $375 million facility due next July.
“We are pleased to have proactively and successfully addressed the maturity of our revolving credit facility,” said Jim Fogarty, president and chief executive officer. “Maintaining strong liquidity — our revolver availability and our cash position — is a critical priority for us, and even more critical in today’s funding environment.”
Quiksilver inked a deal with its banks to consolidate its uncommitted lines of credit into a new four-year committed facility including 170 million euros, or $242.5 million at current exchange, in term loans; a 40 million euro, or $57.1 million, letter of credit facility, and a 58 million euro, or $82.7 million, revolving line of credit.
Limited extended the early tender date on its offer to buy back $294.6 million in debt due 2012 to Aug. 5 from July 31. Limited is using the proceeds of a recent offering of notes maturing in 2019 to buy back the debt.
Carol Levenson, director of research at Gimme Credit, said the debt coming due in 2019 is slightly more expensive, with a coupon of 8.5 percent versus a coupon of 6.125 percent on the 2012 debt.
“But on such a small amount the additional interest expense is immaterial given the meaningful increase in financial flexibility the refinancing will accomplish,” she said.
In other debt buyback news, embattled lender CIT Group Inc. amended its tender offer so investors holding $1 billion in bonds coming due this month could sell them back to the company for 87.5 cents on the dollar instead of the 82.5 cents previously offered. The company said about 65 percent of the notes have already been tendered, enough to make the tender successful under revised terms.
@zacposen's go-to holiday gift? Cookies! "I'll usually bake cookies and send them as a gift," said the designer, who recently released his cookbook "Cooking With Zac: Recipes from Rustic to Refined." Get the recipe for his Brown Butter-Chocolate Chip Cookies via link in bio 🍪🍪🍪 #wwdeye #cookingwithzac
For @monsemaison’s pre-fall 2018 collection, Fernando Garcia and Laura Kim honed in on the brand’s many signatures — men’s wear, which was tweaked and feminized through deconstruction, proportion play and lots of bare shoulders. See the rest of the photos on WWD.com #wwdfashion (📷: George Chinese)
On Friday night, @yohjiyamamotoofficial received the Design for Asia Lifetime Achievement Award in Hong Kong. The 75-year-old designer has been celebrated for many years and is best known for his dark and avant-garde tailoring. “In my long career, in design, architecture, [I’ve been to] so many parties, this is the very first time that I have such a warm feeling, I really appreciate this,” Yamamoto said. #wwdfashion (📷: @dominiquemaitre)
Discovery is collaborating with British pop artist @philipcolbert on a new line of clothing and accessories called Discovery Shark. The collection, which will launch next summer for Shark Week’s 30th anniversary, features a whimsical line of women’s and men’s bomber jackets, sweatshirts, bags and more. #wwdfashion
“I’m always a big champion of a female rapper, and I’m glad to see a new voice that feels unique and authentic that’s coming up, and I think we’re going to see more great things from her,” said @itsjeremyscott about @iamcardib, who performed at @moschino’s Art Basel Miami Beach party last night. #wwdeye (📷: @lexieblacklock)
@janellemonae’s “What’s Your Frequency?” room in @refinery29's #29Rooms made its debut this week at the opening of the Los Angeles art exhibit. “It’s about the ongoing conversation around mass surveillance, the weaponization of technology and cultural uniformity. My space was created so that we can come together and talk about the complexities of our humanity,” said Monáe. #wwdeye (📷: @bucknerphoto)
@pantone announced their Color of the Year 2018: Ultra Violet. Nearly 20 months after the musician Prince’s death, fashion is having a purple moment. Varying shades of purple appeared on spring or fall runways, from @christopherkane to @calvinklein. @gucci’s Alessandro Michele bathed his fall runway in ultra violet-colored light at one point. Pantone 18-3838 is meant to “push the boundaries of what inspires us to look upward and outward to the future.” #wwdnews #wwdfashion (📷: @kukukuba)