U.S.-based apparel manufacturer Renfro Corp.'s performance fell below expectations during the first half of fiscal 2019, resulting in leverage increasing above 7x and covenant headroom tightening to mid-single-digit percentage. We believe ongoing disruption in the retail segment will continue to weigh on the company's performance and could hinder its efforts to meaningfully strengthen profitability, cash flows, and covenant cushion. We are revising the outlook to negative from stable and affirming all of our ratings on the company, including our 'B' issuer credit rating. The negative outlook reflects the potential of a lower rating over the next 12 months if the company fails to meet its operating plan and reduce leverage below 7x while covenant cushion remains in the single-digit area
