The ratings on Renfro Corp. reflect our view of the company's highly leveraged financial profile and vulnerable business risk profile. We view the company's financial risk profile as highly leveraged because of its high, albeit declining, debt burden. We believe that Renfro's business risk profile is vulnerable given its participation in the highly competitive apparel manufacturing industry, its narrow product focus in a commodity-like product, and customer concentration. The company's operating performance remains positive despite a still-soft retail environment. Based on unaudited fiscal 2010 results, net sales and EBITDA increased about 4% and 25%, respectively. The EBITDA increase primarily resulted from a combination of higher sales volume, operating cost improvements, and a larger sales mix of higher-margin branded socks. Partly
