Negative Free Cash FlowPersistent negative free cash flow and a negative operating cash flow to net income ratio indicate the business struggles to convert profits into cash. This constrains funding for inventory purchases and refurbishment, raising reliance on external financing for working capital.
Elevated LeverageHigher debt-to-equity increases financial rigidity and interest sensitivity. In a cyclical retail segment, leverage limits flexibility to buy inventory or invest in omnichannel initiatives during stress, and raises refinancing and covenant risks over the medium term.
Weakening EBIT MarginA declining EBIT margin suggests operating cost pressure that can erode operating leverage. If costs (staffing, rent, refurbishment) continue rising, gross margin stability may not translate to sustainable operating profits, forcing tougher choices on pricing or investment.