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Moody's revises Collective Brands rating outlook to negative

AP ONLINE

Posted: 2008-05-08 12:15:00

NEW YORK (AP) _ Moody's Investors Service on Thursday revised its rating outlook for footwear retailer Collective Brands Inc. to negative from stable after a federal jury in Oregon ordered the company to pay $305 million in damages to Adidas AG.

The verdict stems from a lawsuit that Adidas filed in 2001 against Payless ShoeSource — which changed its name to Collective Brands last year — for selling shoes that Adidas said violated its trademarked three-stripe logo.

About $925 million of rated debt is affected by Moody's action. The credit ratings agency affirmed all other ratings of Collective Brands.

In addition to the jury verdict, Moody's senior analyst Scott Tuhy said the negative outlook also reflects a more challenging macroeconomic environment and the company's increased debt to finance the Stride Rite deal which closed last August.

Topeka, Kansas-based Collective Brands operates about 4,552 retail stores in 15 countries under the Payless Shoe Source brand, and also owns kids shoe retailer Stride Rite.