Citi downgrades Signa Sports to Sell amid material cash burn

As previously reported, Citi analyst Ygal Arounian downgraded Signa Sports to Sell from Neutral with a price target of $1.90, down from $3.90. The company’s first half results fell well short of expectations as the operating environment remains “extremely challenged,” the analyst tells investors in a research note. The firm says a tough macro environment and waning demand led to sizable revenue declines while Signa’s margins compressed as industry-wide excess supply is leading to large-scale discounting and causing material cash burn. This operating environment is expected to continue with headwinds likely remaining for 12-18 months, adds Citi, which is pessimistic about the company’s near-term outlook. It finds the stock’s risk/reward unattractive.