Negative Operating And Free Cash FlowNegative OCF and FCF constrain internal funding for capex, inventory and working capital, forcing reliance on external financing or asset adjustments. Over several months this weakens financial flexibility and increases execution risk for growth initiatives.
Margin Sustainability RiskImproved margins are positive but exposed to input cost inflation and cyclical luxury demand. If pricing power weakens or costs rise, gross and EBIT margins could compress quickly, materially reducing earnings given the company’s currently modest net margin.
Ongoing Need For Debt ManagementModerate leverage is manageable today but, paired with negative cash flow, requires disciplined debt servicing and refinancing plans. Failure to manage leverage could limit capital allocation, raise borrowing costs, and reduce resilience to shocks over the medium term.