S&P upgrades Perry Ellis

S&P said it raised the corporate credit rating on Perry Ellis International Inc. to B+ from B.

The outlook is stable.

The agency also said it raised the rating on the company's $150 million senior subordinated notes to B+ from B. The recovery rating on this debt instrument remains at 3, indicating 50% to 70% expected default recovery.

The upgrades reflect expectations that Perry Ellis will continue to strengthen its profitability and credit measures over the next year, including improving debt leverage toward 3x over the next year from the 3.3x estimate for fiscal 2017, S&P said.

The company's financial policies with respect to shareholder returns, divestitures and acquisitions will support the forecast credit measures, the agency noted. Despite the weak retail environment and foreign-currency headwinds, which continued to slow the company's top-line growth, Perry Ellis kept its EBITDA margin relatively flat at slightly more than 8% at the end of fiscal 2017, S&P added.

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