Moody's revises Men's Wearhouse's ratings outlook to negativeStaff writer ▼ | December 15, 2015
Moody's Investors Service revised the ratings outlook on The Men's Wearhouse to negative from stable.
Rating The accelerating declines in comparable sales
"The outlook change to negative reflects the accelerating declines in comparable sales at Jos. A. Bank, which reported a 14.6% 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 AVP-Analyst, Mike Zuccaro.
"Through the first week of December, Jos. A. Bank's quarter-to-date comparable store sales declined 35.1%. 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 4.8x, up from 4.4x as of August 1, 2015."
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 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." ■