VF CREDIT CUT: Moody’s Investors Service reduced the rating outlook on VF Corp.’s debt to negative from stable due to reduced operating profits and tepid domestic jeans sales. The apparel vendor’s senior unsecured debt rating was confirmed at A2. Part of the reduction in jeans sales came from a shift to lower-priced, private label jeans such as the Faded Glory brand carried by Wal-Mart, VF’s biggest customer. “If consumers continue to focus on `value’ even after an economic rebound, then it may be difficult for VF to achieve past sales levels,” said the rating agency in a statement. VF has taken steps to improve operating profits with some success, noted Moody’s, but has yet to demonstrate sustainability.
CREW CUT: Standard & Poor’s reduced its debt rating on J. Crew Group to “B-minus” from “B” citing a leveraged balance sheet, weak credit protection measures and the dog-eat-dog world of retail. The outlook continues to be negative. As of May 4, the firm had $339 million of funded debt outstanding. S&P in a statement noted: “Credit protection measures could quickly erode if operating results continue to decline.” Same-store sales fell 13 percent in the first quarter and were down by 15.5 percent for 2001.