Genesco Inc Sr Unscd Debt,Corp Crdt Rtgs Raised by S&P.NEW YORK--(BUSINESS WIRE)--Standard & Poor's CreditWire 6/24/97--Standard & Poor's today has upgraded Genesco Inc.'s senior unsecured debt Unsecured debt Debt that does not identify specific assets that the debtholder is entitled to in case of default. and corporate credit ratings to single-'B' plus from single-'B'. Standard & Poor's also has assigned its single-'B' plus rating to the company's $35 million revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility. The bank loan is rated the same as the corporate credit rating since the facility is unsecured. The bankers will be on a par with the other senior creditors in the event of a default. The ratings are based on the company's participation in the competitive footwear industry, supported by its stable Johnston & Murphy business and strengthened retail operations. Genesco has demonstrated two years of improving profitability following its restructurings in 1994 and 1995. The restructurings eliminated the underperforming men's apparel unit and generated cash through the sale of the Mitre soccer unit, leaving the company with its core wholesale and retail businesses. Retail footwear operations have improved over the last three years, driven by strong same store sales Same Store Sales A statistic used in retail industry analysis. It compares sales of stores that have been open for a year or more. Notes: This statistic allows investors to determine what portion of new sales has come from sales growth and what portion from the opening of , especially for the Journeys chain. Yet business risk for this format is high as Journeys caters to teenagers, a notoriously fickle segment of the population. Wholesale operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. dropped slightly in 1996 following two years of improvement, given a still soft market for western boots. This business should benefit from a plant closing in 1997. The company's progress is reflected in improved interest coverage measures, as earnings before interest, taxes, depreciation, and amortization Earnings before interest, taxes, depreciation, and amortization (EBITDA) A financial measure defined as revenues less cost of goods sold and selling, general, and administrative expenses. (adjusted for operating leases) covered interest expense by 3.4 times (x), up from 2.2 times in 1994. Still, the absolute amount of cash flow is small. Capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. is expected to total $26 million in 1997, up from $15 million in 1996. This will fund systems upgrades and accelerated store openings, primarily for the Journeys format. Financial flexibility is enhanced through the company's light debt repayment schedule, with no maturities scheduled before January 1999, when the current credit agreement is due to expire. OUTLOOK: Stable. While Genesco's free cash flow has benefited from the liquidation of assets included in the restructuring and very modest expansion, the margin of protection is expected to decline somewhat as the company resumes growth. Still, cash on the balance sheet and the revolving credit facility should provide adequate financial flexibility. -- CreditWire CONTACT: Mary Lou Burde, CFA (Computer Fraud and Abuse Act of 1986) Signed into law in 1986, the CFA was a significant step forward in criminalizing unauthorized access to computer systems and networks. The Act applies to "federal interest computers" that include any system used by the U.S. , New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of (1) 212-208-1959 |
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