Citing concerns about the “mature premium denim category,” Moody’s Investors Service lowered the corporate family credit rating of True Religion Apparel Inc. a single tick, to “B3” from “B2.”
“B” ratings sit below those in the “Ba” family, the highest speculative, or noninvestment, grade. Approximately $485 million of rated bank debt is covered by the evaluation.
True Religion, previously publicly held, was acquired by Towerbrook Capital Partners LP for $835 million in July. Moody’s estimated sales for the year ended Feb. 1 at $490 million. In its final full year as a public company, sales were reported to be $467.3 million.
Moody’s said the revised rating reflects True Religion’s “high debt leverage in the high six-times range, limited scale and narrow product focus in the premium denim category.” It described premium denim as “mature” and vulnerable to “potential challenges from other rival categories, such as activewear, which has recently gained popularity.”
The rating outlook remained “stable” as Moody’s expects the company to “maintain a good liquidity profile, while modestly growing its earnings.”
Ratings could be downgraded if free cash flow generation “turns negative or earnings declines persist.” The ratings agency said the company “meaningfully underperformed” its expectations in the year ended Feb. 1 “due to heavy merchandise discounting in the back half of 2013 partly as a result of weather and mall traffic weakness.”
In a report by analyst Raya Sokolyanska, Moody’s placed the focus on the strategic plan being put together by chief executive officer David Conn and the team he’s assembled since his arrival at the time of the acquisition. It said the rating could be elevated if the firm “achieves meaningful earnings growth by successfully executing its strategic initiatives while maintaining good liquidity.”
A signal that it had achieved those objectives would be a ratio of debt to earnings before interest, taxes, depreciation and amortization of below 6 and a ratio of earnings before interest, taxes and amortization to interest expense of above 1.75.
“Azzedine has been one of the biggest influences in my life. He has always been such a strong, loving, fatherly figure to me. I call him Papa. His designs are indescribably unique, they are pieces of art. He knew how to make the female form look its loveliest. I have so many memories of him; my favorite might be during my first show with him in Paris. He liked me and he wanted to help me get more work. He called all his friends at Kenzo and Comme des Garcons, and asked them to book me. They said, ‘But she can’t walk!’ And he said, ‘but she has such a great ass!' His friendship and support has been the great privilege of my career. I can't imagine life without him. Repose en paix mon Papa.” - @stephanieseymour tells @wwd. #wwdfashion (📷: @steveeichner) #alaia #azzedinealaia
Azzedine Alaïa, flanked by two of his closest friends, models Stephanie Seymour and Naomi Campbell.
He designed Seymour’s dress for her 1995 wedding to Peter Brant, and treated Campbell (who famously called him Papa), like a daughter. For more on the legendary designer, tap the link in bio. #wwdfashion #alaia #azzedinealaia
Azzedine Alaïa's “I-did-it-my-way” ethos stood out starkly at a time when brands are experimenting with consumer-facing fashion shows, coed formats and trans-seasonal collections – anything to perk up lackluster sales of ready-to-wear in an age of Insta-everything. “It’s not creation anymore. This becomes a purely industrial approach,” the late designer told WWD in an interview last year. “But anyway, the rhythm of collections is so stupid. It’s unsustainable. There are too many collections.” Read more about the iconic designer’s life and work on wwd.com, link in bio. #wwdfashion #azzedinealaia (📷: @WWD Archive, 1986) #alaia
Sneaker reselling app @goat’s latest exhibit, "The Greatest: New York," tells the story of New York's sneaker culture. To celebrate the exhibit, an intimate crowd gathered on Thursday night at the pop-up gallery space, located at Platform in Culver City, to hear guest speaker and illustrator @esymai talk about her own rise in streetwear and women in the business. "For me I'm just someone who is creative. I like to create things," said Chang. #wwdfashion
Azzedine Alaïa, one of the most iconic couturiers of the modern era whose body-con designs defined Eighties fashion, has died in Paris. The diminutive Tunisian-born designer, known for his structured knitted dresses with fitted waists and impeccably cut, figure-hugging second skin silhouettes was deeply admired by his peers, and counted supermodel Naomi Campbell - his adoptive daughter - among his inner circle, one of a gang of glamazons including Farida Khelfa, Carla Bruni and Stephanie Seymour who became ambassadors of his style. (📷: Alexandre Guirkinger) #wwdblast