Thin MarginsOperating margins around 2.2% and net margins near 1.5% leave limited room to absorb cost inflation or competitive price pressure. Persistently low margins constrain retained earnings, limit investment capacity, and make earnings volatile relative to revenue swings over the medium term.
Volatile Cash And EarningsHistorical swings to negative operating and free cash flow in 2023 demonstrate earnings and cash volatility. This undermines forecastability for capital allocation, increases reliance on buffers, and raises execution risk for multi-quarter initiatives like store investments or inventory build.
Weaker Returns On EquityROE of ~4.4% TTM, materially below prior peaks, indicates reduced capital efficiency. Lower returns can reflect margin compression or competitive pressures, limiting shareholder return potential and making it harder to justify capital deployment absent sustained margin recovery.