Steep Multi-year Revenue DeclineA severe drop in revenue erodes scale economics and store productivity, weakening bargaining power with suppliers and increasing per-unit cost burdens. Structurally, such a decline indicates loss of market share or relevance and makes sustainable recovery difficult without major strategic change or renewed consumer demand.
Zero Operating Cash Flow In 2024The absence of operating cash generation is a durable liquidity concern: it forces reliance on external financing for working capital, capex, and debt service. Over months this constrains strategic flexibility, raises refinancing risk, and hampers the company’s ability to invest in store upgrades or omnichannel initiatives needed for a durable recovery.
Elevated Leverage (debt Vs Equity)High absolute debt relative to equity increases interest and refinancing risk, especially with ongoing losses and weak cash flow. Structurally, leverage limits management’s ability to fund turnaround initiatives, raises default probability in prolonged weakness, and tightens capital allocation choices over the medium term.