Oriflame - comment

Oriflame results today were miserable as usual but better than forecast - for the first time... Specifically, the company improved its GM vs. last quarter by more than expected and almost to last year's level (which was of course already depressed). Selling expenses were a little lower, but Admin a little higher, so Adj. EBITDA was €4m better than we thought. However, we seem to have been too bullish on inventory and therefore WC reduction and the company made a €-8m tax payment and incurred a €-8.7m restructuring outflow (should be limited to €-8m for the remainder of the year). So ahead of next month's coupon, the cash balance is disappointing. The company plans to make the coupon payment with the help of an asset sale. We do not know what management were referring to and in light of the loose documentation that sounds a little scary. Other than that it's about the turnaround in the membership now and if that struggles, we could be speaking to Rothschilds as soon as Autumn.