High Financial LeverageA debt-to-equity ratio above 3x signals material leverage that increases interest burden and refinancing risk. Over months, high leverage can constrain capital allocation, limit ability to invest in new clubs or franchise support, and reduce resilience to revenue shocks.
Low Net ProfitabilityA net margin near 2.5% shows limited conversion of revenue into attributable profits despite healthy operating margins. This narrows buffers against downturns, limits retained earnings for reinvestment and constrains long-term returns to equity holders.
Negative Free Cash Flow GrowthDespite strong operating cash flow, negative free cash flow growth suggests rising capex, working capital or cash outflows. Persisting FCF decline limits debt reduction, franchise investment and dividend capacity, weakening financial flexibility over several months.