Authentic Brands Group’s debt ratings were raised by Moody’s Ratings due to the brand management company’s “lower leverage and more balanced financial strategy over the past two years.”
Moody’s expects Moody’s-adjusted debt/EBITDA will remain below 4.5x on a pro forma basis.
The upgrade also reflects Authentic’s “increased scale and improved portfolio quality following the additions of larger, well-recognized brands, including Guess?, Champion, Dockers and the pending acquisition of Lee.”
Moody’s raised its ratings on ABG Intermediate Holdings 2 LLC, the primary borrowing and financing entity for Authentic Brands Group LL, to Ba3 from B1. It also upgraded the company’s probability of default rating (PDR) to Ba3-PD from B1-PD and its backed senior secured first lien bank credit facility ratings to Ba3 from B1. The outlook remains stable.
Moody’s said in its analysis, “ABG’s rating benefits from the company’s relatively stable earnings, reflecting the recurring nature of its royalty revenue and the scale and diversity of its brands. Guaranteed minimum payments represent most of ABG’s revenue, while its asset-light licensor business model with low overhead costs supports strong profit margins and free cash flow generation. ABG’s broad brand portfolio and licensee network further support the stability of royalty collections. Reflecting its business model and solid acquisition execution, the company has grown consistently since inception and has demonstrated resilience through supply chain disruptions and a difficult discretionary consumer spending environment. Over the next 12-18 months, we expect continued earnings growth driven by recently acquired intellectual property, while liquidity remains good, supported by solid free cash flow and adequate excess revolver availability.
“Nevertheless, the rating also reflects governance considerations, including risks associated with private equity ownership and an acquisitive growth strategy that relies on debt financing including a heavy reliance on revolver borrowings. Moody’s-adjusted debt/EBITDA was 4.6x as of March 31, 2026 but pro forma for the full-year impact of the Guess?, Kevin Hart and Dockers acquisitions, we estimate debt/EBITDA at 4.2x. We expect that pro-forma debt/EBITDA will remain in the low-4x range after the pending Lee acquisition closes and in the next 12-18 months. In addition, the portfolio’s exposure to legacy brands with significant wholesale reliance poses a risk to the growth and sustainability of its royalty payments in a fast-evolving retail landscape that requires ongoing marketing and technology investment. ABG’s model depends on licensees maintaining product quality, distribution discipline and marketing investment, because deterioration at the licensee level can pressure retail sales and ultimately royalty growth. The rating also reflects exposure to licensee credit risk, as illustrated by the recent bankruptcies of several licensees, which can pressure royalty collections and require renegotiation of agreements. Further, in our view, the company’s growing entertainment business, including celebrity IP- and endorsement-related revenue tied to figures such as David Beckham, Shaquille O’Neal and Kevin Hart, is less proven and potentially more volatile than traditional product licensing.
“The stable outlook reflects our expectations for consistent operating performance, Moody’s-adjusted debt/EBITDA in the 4-4.5x range and good liquidity.”
Authentic’s roster of brands includes Reebok, Champion, Shaquille O’Neal, David Beckham, Kevin Hart, Sports Illustrated, Elvis Presley, Muhammad Ali, Marilyn Monroe, GUESS, Aéropostale, Nautica, Eddie Bauer, Lucky Brand, Nine West, Brooks Brothers, Juicy Couture, Vince Camuto, Izod, Van Heusen, Dockers, Ted Baker, Hart Schaffner Marx, Vince, Barneys New York, Judith Leiber, Quiksilver, Spyder, Billabong, Volcom, Roxy, RVCA, DC Shoes, Prince, Sperry and Hunter.
Image courtesy Authentic Brand Group
