High LeverageSustained high debt-to-equity raises refinancing and interest coverage risk, constraining capital allocation. Over several months this can limit investment, force higher working-capital financing during seasonality, and increase vulnerability to rising rates or demand weakness.
Margin PressureA declining gross margin reflects rising input or production costs versus pricing power. Persisting margin erosion over 2-6 months reduces operating leverage, compresses cash available for capex or deleveraging, and makes profitability more sensitive to revenue dips in a competitive apparel market.
Inconsistent Cash GenerationVariable and occasionally negative free cash flow undermines the company's ability to self-fund operations and investments. Over months this increases reliance on external financing, raises liquidity risk, and can force short-term trade-offs between capex, debt reduction, and working-capital needs.