Recurring Negative ProfitabilityTwo consecutive years of negative EBIT and net income indicate structural margin shortfalls. Persistent losses erode equity, limit reinvestment capacity, and mean revenue growth alone won't restore health without sustained cost or mix improvements to make profits durable.
Weak Cash GenerationMulti-year negative operating and free cash flow create ongoing liquidity pressure and force reliance on external funding. This constrains investment, inventory financing and working-capital management, increasing execution risk and limiting the company's ability to scale profitably in the medium term.
Rising LeverageAn increasing debt-to-equity profile raises interest and refinancing risk, particularly problematic alongside losses and weak cash flow. Higher leverage reduces financial flexibility and magnifies downside in cyclical apparel markets unless profitability and cash conversion materially improve.