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Non-Tech : Loehmanns (LOEH) -- Ignore unavailable to you. Want to Upgrade?

To: Steve Hudson who wrote (53)	3/13/1999 8:54:00 AM
From: Ram Seetharaman	Read Replies (2) \| Respond to of 69

Their phone number is 415-781-9700. LOEH has the following expected bad news from Dec. 1998 Moody's audit. 03/12 13:53 MOODY'S CUTS LOEHMANN INC <LOEH.O> SENIOR NOTES TO B3 FROM B2 ( PRESS RELEASE PROVIDED BY MOODY'S INVESTORS SERVICE ) NEW YORK, March 12 - Moody's Investors Service downgraded Loehmann's, Inc.'s $95 million 11.875% senior notes due 2003 to B3 from B2, and confirmed the B1 rating on the company's $60 million senior secured credit facility. These decisions conclude the review action begun on December 30, 1998. Loehmann's senior implied rating remains B2. The rating outlook is negative. The ratings reflect Loehmann's high leverage and thin operating profit margins; the pressure to its franchise from the growth in discount shopping alternatives, as well as the department stores' shift to more promotional strategies; the costs of having expanded into markets where Loehmann's lacked name recognition; and the volatility of apparel demand and fashion trends. The ratings are supported by recent improvements in profitability as a result of closing less profitable stores; Loehmann's longevity and strong name recognition among its traditional customer base; and a lower reliance on women's apparel due to the successful expansion of productive mens apparel and gift categories throughout the chain. The downgrade of the senior notes reflects their effective subordination to an increased level of well-secured bank debt. Loehmann's experienced negative net cash flow in the fiscal year ended January 1999 as a result of a higher net investment in working capital. The B1 rating of the bank debt reflects the protection afforded to lenders as a result of security and the borrowing base formula which restricts borrowing levels and advance rates. The ratings incorporate Moody's expectations that the company will continue to show the positive momentum seen thoughout much of 1998, and that reduced capex and working capital needs in the near term will allow for debt reduction. The negative outlook reflects that an inability to reduce debt or improve operating profitability in the near term could result in future negative rating actions. Loehmann's, Inc., headquartered in the Bronx, New York, is an apparel retailer with 68 stores. Revenues were $432 million in the year ended January 1999. At a stock price of $ 1.625 you can't go wrong buying if it is long term attractive. Things can only get better, if they run a tight shop.