TEXT-Moody's downgrades ESCADA

(The following statement was released by the ratings agency)

May 15 - Moody's Investors Service has today downgraded ESCADA AG
("ESCADA") Corporate Family Rating to B2 from B1 and downgraded the senior
unsecured rating on the notes due 2012 to B2 from B1 (LGD3, 49%). The rating
action concludes the review process initiated on the 10th of April 2008
following the profit warning announced by the company. The outlook on the
ratings is negative.

The rating downgrade reflects the expectations that the company operating
performance during the current financial year is likely to remain under
pressure given the current market conditions. According to Paolo Leschiutta,
lead analyst at Moody's Investors Service for ESCADA, "Moody's recognises the
effort and the progress the company is making in restructuring its operations,
however current market conditions and soft consumer spending in key reference
markets remain challenging and are likely to heighten the execution risk
associated with the ESCADA Excellence programme". The analyst added: "as a
result, profitability and key credit metrics, such as financial leverage and
fixed charge coverage, are likely to remain weak even for a B2 rating over the
intermediate term, at time when free cash flow generation will be also under
pressure given the lower expected cash flow from operation in conjunction with
the planned investments by the company". The rating assumes that ESCADA will
continue to receive support from core banks and will successfully renegotiate a
new bank facility to replace the one expiring in December 2008.

The negative outlook reflects Moody's view that 2008 will remain a year of
transition for ESCADA as the pressure on top line and the relative high
operating leverage of Group's activities reduce the company's flexibility and
that, as a consequence, profitability is likely to remain under pressure beyond
October 2008 as the company implements its restructuring programme. The outlook
also reflects the current economic conditions and the fact that consumer
spending is likely to remain low over the intermediate term. The outlook could
be changed back to stable following the successful renegotiation of a new bank
facility and clear evidence of stabilisation of the operating margins.

The ratings could be downgraded further if the liquidity profile fails to
be restored over the next few weeks. Additional erosion in operating
performance declining below new company estimates led to financial leverage,
measured as Debt to EBITDA, to exceed 6x and fixed charge coverage, measured as
(EBITDA -- Capex) to Interest Expenses, below 1x could result in further
negative pressure on the rating. Although positive action on the ratings is
currently unlikely, the ratings could be upgraded if there was significant debt
reduction in conjunction with restored profitability and a new credit line.
The following ratings have been downgraded:
Corporate Family Rating, downgraded to B2 from B1;
Senior Unsecured Rating on the EUR 200 million notes due 2012 downgraded to
B2 (LGD3, 49%) from B1

ESCADA, headquartered in Munich, is one of the leading European
manufacturers and distributors of ready-to-wear luxury apparel for women. In
the financial year ended 31 October 2007, the company reported consolidated
sales of EUR686 million and EBITDA of EUR68.2 million.
(New York Ratings Team)