Standard & Poor’s Ratings Services has placed Liz Claiborne Inc. on “CreditWatch,” following the $4.99 billion vendor’s gloomy first-quarter results Tuesday.
The move means Claiborne’s corporate credit ratings could be lowered if the outlook is negative. Currently S&P rates the company as “BBB” long-term — the second-highest junk bond rating, two notches below investment grade status — and “A-2” short-term — the second-highest short-term insurer financial strength rating.
“We are concerned with intensifying market pressures on several of Liz Claiborne’s businesses,” S&P credit analyst Susan Ding said in a statement.
The move comes a day after Claiborne reported a 65.5 percent fall in first-quarter earnings and provided 2007 guidance of between $1.90 and $2.05 a diluted share. Weak wholesale numbers in the company’s traditional women’s sportswear brands led the losses, and Claiborne’s new chief executive officer, William L. McComb, said to expect softness in that area to persist.
After falling 17 percent Tuesday, Claiborne shares declined a further 5 percent Wednesday, closing at $35.14 from $37.Claiborne declined comment.