Moody’s revises rating outlook on Levi Strauss to stable from positive, citing leverage

Moody’s outlook on Levi Strauss changed to stable

NEW YORK — Moody’s revised its rating outlook on Levi Strauss & Co. to stable from positive on Thursday, saying the company’s leverage was likely to remain high for now.

The change indicates that Moody’s believes the company’s profile does not warrant a higher rating than it has now. Its corporate family rating and probability of default rating are at “B1,” which is four notches below investment grade. The agency affirmed its ratings.

Moody’s Senior Analyst Scott Tuhy said the company’s operating margins have eroded, primarily in its European business, while the company continues to invest in retail.

As the company is spending more on capital expenditures in the near term, it is also expected to maintain a dividend payment, the rating agency said in a statement. Because of this, Moody’s does not anticipate the company reducing its debt levels in the near term.

The iconic jeans maker is based in San Francisco and is privately held. It also sells Dockers pants and Signature brand products.