Moody's lowers outlook on Blyth
NEW YORK (AP) — Moody's Investors Service lowered its outlook on Blyth Inc. Thursday following the company's announcement that it plans to spin off and take part of its business public.
Blyth said in August that it planned to spin off ViSalus, its weight-loss, energy-drink and nutritional-supplement business, through an initial public offering worth up to $175 million. The Greenwich, Conn.-based company also sells home accessories such as candles and fragrances through a catalog, online and house parties.
Moody's affirmed the company's junk-grade B2 corporate family and all other ratings for the company. But it lowered Blyth's rating outlook to "negative" to "stable" and assigned it a speculative grade liquidity rating of SGL-4, which indicates weak liquidity.
The rating agency said the change is due to the company's tight cash position, continued weakness in its core candle and home-fragrance business and the uncertainty that surrounds its potential IPO of the ViSalus business.
Blyth has a 73 percent stake in ViSalus.
Moody's said it expects the company's direct selling candle business will continue to struggle due to the economy's impact on consumer spending. It also said that the weight-management product business helps offset the weakness in its core business.
ViSalus has posted extraordinary revenue growth over the last year but Moody's said it believes that this rate of growth is unsustainable. It also noted that the weight-management niche carries more risk than its candle and home-fragrance business.
Shares of Blyth fell $2.59 to close at $38.90 but recovered $1.19 to $40.09 in after-hours trading. The company's stock is often volatile but got a major boost in August following the announcement of the IPO.