Declining RevenueSustained top-line decline erodes scale economics and bargaining leverage with retailers, pressures gross margins, and limits reinvestment in product and marketing. Continued revenue contraction over months undermines long-term growth potential and makes profitable recovery harder to achieve.
Negative EquityNegative shareholders’ equity reflects cumulative losses and weak capitalization. It constrains access to cost-effective debt or equity, increases refinancing and covenant risk, and can force dilutive raises or restructuring—impairing strategic flexibility and long-term investment capacity.
Sharp Free Cash Flow DeclineA steep fall in free cash flow materially reduces internal funding for inventory, marketing, and product development. Over several months this heightens reliance on external financing, raises liquidity risk, and can necessitate cutbacks or asset sales that impair competitive position and growth initiatives.