Isabel Marant - comment

We see the Q2 numbers as modestly positive for the bonds, but not sufficient to materially change the credit story. Revenue increased 7.2% in Q2, taking H1 growth to 4.5%, while recurring EBITDA rose 14% in Q2 and 7% for H1 to €28.2m, with the margin improving to 25.4%. The stronger Q2 performance reflects an improvement in wholesale alongside continued DTC growth, with lower discounting also supporting margins.

Cash generation remains the main constraint, with only €5.6m of operating cash flow in H1, while the €15m RCF remains unavailable following the breach of the 4.25x June leverage covenant. Cash was €47.9m in June, supported by €11.4m of factoring, providing some liquidity headroom.

The debt extension and €20m shareholder contribution have removed the near-term maturity risk, but leverage remains elevated, and the business is still reliant on continued EBITDA growth and shareholder support. The Q2 improvement is encouraging, but we would need to see a sustained improvement in cash generation and deleveraging before becoming more constructive on the credit.