Moody’s revised its ratings outlook for Men’s Wearhouse to negative from stable.

“The outlook change to negative reflects the accelerating declines in comparable sales at Jos. A. Bank, which reported a 14.6 percent decline in the third quarter due to a drop in customer traffic as it began the transition away from the buy-one-get-three promotional events,” stated Moody’s assistant vice president and analyst, Mike Zuccaro. “Through the first week of December, Jos. A. Bank’s quarter-to-date comparable store sales declined 35.1 percent. Should this trend continue, the company risks missing the low end of its full-year earnings guidance, which we currently expect would result in an increase in lease-adjusted debt/EBITDA to around 4.8 times, up from 4.4 times as of August 1, 2015.”

Moody’s affirmed the company’s ratings. The Corporate Family rating of Ba3 reflects the scale of Men’s Wearhouse since it has revenue of $3.6 billion and sells primarily suits, which has less fashion risk than other apparel. Moody’s also expects that balance sheet cash, operating cash flow and revolver availability will cover cash flow needs throughout the next 12 months.

The ratings could be downgraded if the integration of Jos. A Banks faces further execution problems. Men’s Wearhouse decided to end the buy-one-get-one-free suit promotions that resulted in fewer sales. So far, customers haven’t decided they want to come back if they can’t get the steep discount.

Moody’s is concerned about Men’s Wearhouse’s high debt levels and noted that there was no room for more aggressive financial maneuverings, like share repurchases or acquisitions. The ratings could be upgraded if the company can demonstrate that the synergies take hold and sees positive comparable sales.

Zuccaro added, “The declines at Jos. A. Bank are likely to continue into at least the first half of 2016, likely causing further weakening in metrics as it will take time for Jos. A. Bank rebuilding efforts to take hold and for customers to adjust to the new strategies. Prolonged or accelerated declines or an inability to turn around recent weakness in the company’s free cash flow could pressure the company’s ratings.”

On Friday, Standard & Poor’s downgraded Men’s Wearhouse’s corporate credit rating by a single notch to B from B-plus. Equity analysts have also begun ditching the company, with Stifel downgrading the stock and scratching the $27 price target. The analysts wouldn’t even give it a new price target due to the uncertainty. Mizuho dropped its price target to $16.

Men’s Wearhouse stock is down more than 9 percent on Monday to trade near $13.41. It has dropped from a 52-week high of $66.18 to a low of $13.19. In the last six months, Men’s Wearhouse stock has lost 78 percent of its value.

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