Moody’s Investors Service changed its ratings outlook on G-III Apparel Group, Ltd. to positive from negative.
Moody’s also affirmed G-III Apparel’s ratings, including the corporate family rating (CFR) at Ba3, probability of default rating (PDR) at Ba3-PD and the senior secured notes rating at Ba3. The speculative-grade liquidity rating was upgraded to SGL-1 from SGL-3.
The outlook change to positive and reflects G-III’s better than expected operating performance and credit metrics over the past year as the company was able to navigate the challenging environment by effectively reducing costs and debt, and the successful restructuring of its retail operations including the closure of the Wilsons Leather, G.H. Bass and Calvin Klein Performance stores.
Although still having weakened in 2020 due to the pandemic, the company continues to maintain solid metrics, with debt/EBITDA of around 2.2 times as of April 2021, according to Moody’s. Moody’s expects further improvement over the coming year as the company recovers from the pandemic and realizes the benefits from its recent restructuring; however, Moody’s said uncertainty remains around the pace of recovery as the pandemic continues to have a lingering negative effect on the global economy particularly with supply chain disruptions as international countries continue to contend with rising case counts and restrictions.
The upgrade to SGL-1 reflects the company’s good liquidity position supported by $396 million of cash and $614 million of availability under its undrawn $650 million ABL revolver at the end of April 2021 and Moody’s expectation for continued positive free cash flow over the next 12-to-18 months.
Photo courtesy G-III Apparel