Isabel Marant - comment

Progress at Isabel Marant remains uneven. While there has been notable advancement in the retail segment, the overall performance continues to be constrained by the wholesale segment. Management has delivered strong growth in the direct-to-customer channel, both online and in physical retail, where revenue increased by 20%. However, the wholesale segment continues to decline, although at a slower rate than in previous quarters. On a consolidated basis, revenue rose by 8 per cent year on year in the second quarter, with EBITDA remaining broadly flat.

Leverage stands at approximately 5.4x on a post-IFRS 16 basis, which is high for a business with limited tangible assets. Nevertheless, Isabel Marant maintains adequate liquidity, with €33m in cash and a further €15m available under an undrawn RCF. The next bond maturity is not until February 2028, which supports the investment case at 57%; the 14% running yield appears attractive.

That said, on a pre-IFRS 16 basis, leverage increases to 7.9x. Even at a 57%, creditors are creating the business at 4.1x EBITDA, and that is without the founder/management’s requirement to be accommodated in any future restructuring.