Lindex Group's second quarter revenue remained stable in a challenging market, however planned growth investments impacted adjusted operating result
LINDEX GROUP plc, Half year financial report 19.7.2024 at 8.30 EEST
Lindex Group's Half-year Financial Report 1 January - 30 June 2024
Lindex Group's second quarter revenue remained stable in a challenging market, however planned growth investments impacted adjusted operating result
April-June 2024:
- Lindex Group's revenue was EUR 251.6 (252.0) million. The revenue was level with the comparison period, with a slight decrease of 0.2%, and 1.0% in local currencies.
- The Lindex division's revenue decreased to EUR 169.7 (176.2) million due to a lower number of visitors in stores in June. In local currencies, the revenue decreased by 4.9%.
- The Stockmann division's revenue increased to EUR 81.9 (75.8) million, due to the timing and success of the Crazy Days campaign. In 2024, the campaign was held at the beginning of the second quarter in April, while in 2023, it contributed both to the first and second quarter. - The Group's gross margin was level with the comparison period at 60.0% (60.1).
- The Group's adjusted operating result declined to EUR 29.5 (31.6) million, where currency rates didn't have any material impact.
- The Lindex division's adjusted operating result declined to EUR 30.8 (36.2) million, explained by decreased revenue in June due to lower number of visitors in stores and planned higher costs for marketing and digital development enabling future growth.
- The Stockmann division's adjusted operating result improved to EUR -0.6 (-3.5) million, mainly due to the timing and success of the Crazy Days campaign as well as efficient cost saving actions. - Operating result declined to EUR 20.3 (30.2) million mainly due to settling disputes related to the restructuring programme.
- Net result declined to EUR 7.0 (13.8) million.
- Earnings per share declined to EUR 0.04 (0.09).
January-June 2024:
- Lindex Group's revenue was EUR 444.4 (450.4) million. The revenue decreased by 1.3%, and in local currencies by 2.0%.
- The Lindex division's revenue decreased to EUR 300.4 (302.7) million. In local currencies, the revenue decreased by 1.8%.
- The Stockmann division's revenue decreased to EUR 144.1 (147.8) million. - The Group's gross margin was level with the comparison period at 58.4% (58.5).
- The Group's adjusted operating result declined to EUR 23.0 (29.2) million.
- The Lindex division's adjusted operating result declined to EUR 35.0 (41.8) million.
- The Stockmann division's adjusted operating result improved to EUR -10.0 (-10.5) million. - Operating result was EUR 12.7 (27.3) million.
- Net result declined to EUR -8.4 (33.3) million.
- Earnings per share declined to EUR -0.05 (0.21).
Guidance for 2024 (updated 15 July 2024):
In 2024, Lindex Group expects its revenue in local currencies to be in the range of -2% to +2% compared to 2023. The Group's adjusted operating result is estimated to be EUR 70-90 million. Foreign exchange rate fluctuations may have a significant effect on the adjusted operating result.
Previous guidance for 2024 (published 9 February 2024):
In 2024, Lindex Group expects its revenue to increase by 1-3% in local currencies compared to 2023. The Group's adjusted operating result is estimated to be EUR 70-90 million. Foreign exchange rate fluctuations may have a significant effect on the adjusted operating result.
Market outlook for 2024:
The market environment in 2024 is expected to remain challenging. The macroeconomic situation in Europe remains uncertain due to the continuing geopolitical instability. High interest rates and inflation are holding back economic growth, and the retail sector may be affected by lower consumer demand. Forecasts are indicating a stagnant GDP (Gross Domestic Product) development or slow growth in the company's key markets. Inflation is forecasted to continue declining from high to targeted levels. The situation may vary between the Group's markets. Disruptions in supply chains and international logistics during the year cannot be excluded either.
CEO Susanne Ehnbåge:
At Lindex Group, we are continuing our strategic journey to accelerate growth and value creation. While focusing on delivering our financial targets, we are doing our utmost to secure that Lindex Group is fit for capturing the future business opportunities. We continue to deepen our understanding of the customers, enhance our offering, develop new sales channels, invest in digitalisation, streamlining processes and proceeding in our sustainability agenda - all in line with our divisions' strategies.
Lindex Group's second quarter was twofold. In April and May, our performance was good in both divisions. However, in June, the revenue declined due to lower visitor numbers in stores, especially in the Lindex division. Despite this, the Group's revenue and gross margin remained at the comparison period level, largely thanks to the Stockmann division's successful Crazy Days campaign in April.
The Group's adjusted operating result declined due to the revenue decline in June and planned higher costs for marketing and digital development for enabling future growth. I am pleased that the Stockmann division improved its adjusted operating result month by month compared to the previous year. This improvement, driven by enhanced operational efficiency, mitigated some of the result decline in the Group. The reasons behind the revenue decline in June have been analysed, revealing a drop across the entire fashion market. As we have communicated, the market outlook remains challenging.
In June, the Science Based Targets initiative (SBTi) approved Lindex Group's science-based climate target, which is to reduce greenhouse gas emissions by 42% by 2030 compared to 2022 both in our own operations (Scope 1 and 2) and value chain (Scope 3). SBTi's validation encourages us to continue accelerating climate actions while growing our business profitably and sustainably. The validation is an important milestone in our journey to reduce climate impacts, and our systematic approach has already resulted in significant emission reductions.
Lindex Group continues to investigate strategic alternatives for the Stockmann department stores business, and we expect to finalise the assessment in 2024. We also aim to end our restructuring process as soon as possible. In the second quarter, we reached a settlement agreement with Nordika II SHQ Oy, which means that there is only one disputed claim left.
I am excited to continue our path towards sustainable and profitable growth together with the Lindex Group team. Our biggest investment in enabling future growth, Lindex's new omnichannel distribution centre, will be taken into use in the autumn. In addition, our projects to develop digitalisation and streamline processes are proceeding well and supporting improved operational efficiency. I would like to thank all our employees for their contribution towards our strategic goals.
KEY FIGURES
4-6 | 4-6 | 1-6 | 1-6 | 1-12 | |
Revenue, EUR mill. | 251.6 | 252.0 | 444.4 | 450.4 | 951.7 |
Revenue growth, % | -0.2 | -6.3 | -1.3 | -3.2 | -3.1 |
Local currency revenue growth, % | -1.0 | -0.5 | -2.0 | 2.0 | 1.6 |
Digital share of revenue, % | 17.2 | 16.0 | 17.9 | 16.8 | 16.8 |
Digital revenue growth in local currencies, % | 6.5 | 2.5 | 4.5 | -0.2 | 2.7 |
Gross profit, EUR mill. | 150.9 | 151.5 | 259.4 | 263.5 | 554.2 |
Gross margin, % | 60.0 | 60.1 | 58.4 | 58.5 | 58.2 |
Adjusted operating result, EUR mill. | 29.5 | 31.6 | 23.0 | 29.2 | 80.0 |
Adjusted operating margin, % | 11.7 | 12.5 | 5.2 | 6.5 | 8.4 |
Operating result, EUR mill. | 20.3 | 30.2 | 12.7 | 27.3 | 76.5 |
Operating margin, % | 8.1 | 12.0 | 2.9 | 6.1 | 8.0 |
Net result for the period, EUR mill. *) | 7.0 | 13.8 | -8.4 | 33.3 | 51.7 |
Net debt excluding IFRS 16 items, EUR mill. | -30.0 | -60.9 | -65.6 | ||
Equity ratio, % | 28.6 | 28.0 | 29.9 | ||
Equity ratio (excluding IFRS 16 items), % | 60.5 | 58.4 | 60.5 | ||
Stock-in-trade (inventory), EUR mill. | 173.8 | 171.8 | 162.9 | ||
Operating free cash flow, EUR mill. | 27.7 | 55.6 | -15.8 | 15.2 | 70.8 |
Capital expenditure, EUR mill. | 10.0 | 16.1 | 16.9 | 29.6 | 65.1 |
EPS, basic, EUR **) | 0.04 | 0.09 | -0.05 | 0.21 | 0.33 |
Number of employees, average | 6 021 | 6 082 | 5 801 |
*) The net result for the period declined due to lower operating result and increased tax expenses. The operating result was lower due to higher costs related to the restructuring programme as presented in the items affecting comparability. The tax expenses in the comparison period were impacted by a positive tax decision for Lindex Holding AB (former Stockmann Sverige AB).
**) Earnings per share declined to EUR -0.05 (0.21) due to the lower net result as explained above and an increased number of shares compared to the previous period.
ITEMS AFFECTING COMPARABILITY (IAC)
EUR million | 4-6/ | 4-6/ | 1-6/ | 1-6/ | 1-12/ |
Operating result | 20.3 | 30.2 | 12.7 | 27.3 | 76.5 |
Adjustments to operating result | |||||
Costs related to restructuring programme and other disputes | 7.7 | 0.0 | 10.5 | 0.5 | 2.6 |
Costs related to strategic and organisational development | 1.4 | 0.8 | 4.2 | 0.8 | 2.3 |
Insurance claim settlement for losses related to COVID-19 | 0.0 | -4.5 | |||
Loss on disposal of subsidiary shares | 0.6 | 0.6 | 0.6 | ||
Other operating income from lease modifications of sale-and-leaseback items | -2.1 | ||||
Adjusted operating result | 29.5 | 31.6 | 23.0 | 29.2 | 80.0 |
STRATEGY
Lindex Group's two divisions, Lindex and Stockmann, have their own strategies targeting sustainable and profitable growth. The Lindex division's strategy builds on Lindex's purpose of empowering and inspiring women everywhere. The division's three strategic must-win areas are to accelerate growth, transform into a sustainable business, and decouple cost from growth. The Stockmann division's customer-centric strategy builds on Stockmann's purpose of being a marketplace for a good life. The division's three strategic must-win areas are to elevate offering, grow and leverage the loyal customer base, and ensure a seamless omnichannel experience. Additionally, the Group has a clear focus on operational efficiency.
Both divisions are committed to Lindex Group's science-based climate target to reduce greenhouse gas emissions from its own operations and its value chain by 42% by 2030 compared to 2022. The Science Based Targets initiative (SBTi) validated the Group's climate target in June 2024.
In September 2023, Lindex Group initiated a strategic assessment aiming to crystallise shareholder value by refocusing the Group's business on Lindex. As part of the assessment, the Group changed the name of its parent company from Stockmann plc to Lindex Group plc, as decided by the Annual General Meeting on 21 March 2024. The Group continues to investigate strategic alternatives for the Stockmann department stores business. Lindex Group expects the strategic assessment to be finalised during 2024 and will provide an update on the assessment if, and when, appropriate.
Half-year Financial Report
This company announcement is a summary of the Lindex Group's Half-year Financial Report 1 January - 30 June 2024 and includes the most relevant information of the report. The complete report is attached to this release as a pdf file and is also available on the company's website lindex-group.com.
Financial releases in 2024
Lindex Group will publish its financial reports in 2024 as follows:
- 25 October 2024, Interim Report for January-September
Webcast for analysts and the media
A media and analyst briefing will be held in English as a live webcast today, on 19 July 2024 at 10:00 a.m. EEST. The event can be followed via this link. The recording and presentation material will be available on the company's website after the event.
LINDEX GROUP plc
Susanne Ehnbåge
CEO
Further information:
Susanne Ehnbåge, CEO
Annelie Forsberg, CFO
Contact via Lindex Group's MediaDesk info@stockmann.com, tel. +358 50 389 0011
Marja-Leena Dahlskog, Head of Communications & IR, tel. + 358 50 502 0060
Distribution:
Nasdaq Helsinki
Principal media
Lindex Group plc is an international multichannel retail group with two divisions: Lindex and Stockmann. Lindex is a global fashion company with a purpose to empower and inspire women everywhere. Its three strong categories include women's and kids' wear as well as lingerie, where it is a market leader in the Nordics. Stockmann is a premium multi-brand retailer with department stores in Finland and the Baltics. Its purpose is to be a marketplace for a good life. In 2023, the Lindex Group's revenue was EUR 952 million and it had some 5 800 employees. The Group's roots lie in the Stockmann company founded in 1862 and its shares are listed on the Nasdaq Helsinki Ltd. in Finland. www.lindex-group.com
