NEW YORK — Debt-rating agency Standard & Poor’s on Monday revised its outlook for Kellwood Co. to stable from negative because of the apparel manufacturer’s improved financial performance, including a 6.4 percent boost in revenue last year and an operating margin that rose to 7.6 percent — an increase of 170 basis points.
S&P also reaffirmed Kellwood’s corporate credit and senior unsecured rating of “BBB-minus,” which is the lowest investment-grade rating, one step above noninvestment or junk status. The change in outlook gives Kellwood some cushion, since a junk rating can make it more difficult to borrow money and also might compel some mutual funds, which follow set guidelines, and other investors to sell a company’s stock.
“The ratings on Kellwood reflect its position as a leading supplier of branded and private label apparel, as well as its diverse distribution channels and moderate financial policy,” S&P analyst Susan H. Ding said in a statement.
One the other hand, she added, “The company’s exposure to changing consumer preferences in apparel, its below-average operating margins and its acquisitiveness offset these factors. The ratings also incorporate flexibility for small to medium-sized acquisitions.”
Kellwood’s stock fell 67 cents, or 1.7 percent, to 39.45 on the New York Stock Exchange.