Lindex Group's third quarter revenue decreased slightly in a challenging market, planned growth investments continued to impact adjusted operating result
LINDEX GROUP plc, Interim report 25.10.2024 at 8.30 EEST
Lindex Group's Interim Report 1 January - 30 September 2024
Lindex Group's third quarter revenue decreased slightly in a challenging market, planned growth investments continued to impact adjusted operating result
July-September 2024:
- Lindex Group's revenue was EUR 222.1 (226.9) million. The revenue decreased slightly by 2.1%, and 2.6% in local currencies.
- The Lindex division's revenue decreased to EUR 159.3 (162.3) million mainly due to the lower stock availability caused by logistical challenges in the latter part of the quarter. In local currencies, the revenue decreased by 2.5%.
- The Stockmann division's revenue decreased to EUR 62.9 (64.7) million, due to lower sales in fashion category. - The Group's gross margin was level with the comparison period at 58.2% (58.5).
- The Group's adjusted operating result declined to EUR 15.8 (20.6) million, where currency rates didn't have any material impact.
- The Lindex division's adjusted operating result declined to EUR 21.1 (26.2) million, explained by lower revenue and increased costs.
- The Stockmann division's adjusted operating result improved to EUR -4.5 (-4.8) million, due to successful cost efficiency measures. - Operating result declined to EUR 15.0 (20.3) million.
- Net result declined to EUR 1.8 (8.7) million.
- Earnings per share declined to EUR 0.01 (0.05).
January-September 2024:
- Lindex Group's revenue was EUR 666.5 (677.4) million. The revenue decreased by 1.6%, and in local currencies by 2.2%.
- The Lindex division's revenue decreased to EUR 459.7 (464.9) million. In local currencies, the revenue decreased by 2.0%.
- The Stockmann division's revenue decreased to EUR 206.9 (212.4) million. - The Group's gross margin was level with the comparison period at 58.3% (58.5).
- The Group's adjusted operating result declined to EUR 38.8 (49.8) million.
- The Lindex division's adjusted operating result declined to EUR 56.1 (68.0) million.
- The Stockmann division's adjusted operating result improved to EUR -14.5 (-15.3) million. - Operating result was EUR 27.7 (47.6) million.
- Net result declined to EUR -6.5 (42.0) million, mainly due to increase in tax expenses and costs related to restructuring programme.
- Earnings per share declined to EUR -0.04 (0.27).
Guidance for 2024 (specified on 25 October 2024)
Lindex Group has specified its guidance within the range based on the January-September 2024 performance.
Specified guidance for 2024:
In 2024, Lindex Group expects its revenue in local currencies to be in the range of -2% to +0% compared to 2023. The Group's adjusted operating result is estimated to be EUR 70-80 million. Foreign exchange rate fluctuations may have a significant effect on the adjusted operating result.
Guidance for 2024 (published on 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.
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. Inflation is forecasted to continue declining from high to targeted levels. Forecasts are indicating a stagnant GDP (Gross Domestic Product) development or slow growth in the company's key markets. 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:
During the third quarter, our revenue decreased slightly in a challenging market and our adjusted operating result was impacted by the planned growth investments. I am very pleased with the good progress in our strategic projects that will future proof our business.
During the third quarter, geopolitical uncertainties continued, and the macroeconomic situation kept on challenging consumer confidence affecting the demand. In Lindex Group's key markets, the fashion industry showed fluctuations. In Finland, the fashion market declined throughout the quarter, while in Sweden the market remained close to the previous year's level.
Regarding our financial performance in the third quarter, Lindex Group's revenue decreased slightly. The reasons behind the decrease were lower stock availability impacted by logistical challenges in the Lindex division, lower fashion sales in the Stockmann division and exceptionally warm weather that impacted both divisions. The Group's adjusted operating result declined to EUR 15.3 (20.6) million due to lower revenue and increased costs in the Lindex division. Despite this, I am pleased with the Stockmann division's profit improvement, which was due to successful cost efficiency measures. The Crazy Days campaign was held after the reporting period, and it performed better than the previous year. Considering Lindex Group's operating environment, I see that both divisions' strong commitment to improve commercial and operational efficiency and the determined ongoing work towards our strategic growth and profitability targets are essential.
In addition, it is crucial to ensure that our business operations are future proof. During the quarter, extensive testing was conducted in Lindex's new omnichannel distribution centre in order to prepare for the go-live in the fourth quarter of 2024. The centre is the Lindex division's biggest investment ever and it will enable future growth, enhanced operational efficiency and increased capacity in 2025 and onwards. We also introduced a new operating model in the Lindex division to unlock growth opportunities. We are continuing our investments in digitalisation of our stores and supply chain as well as improving operational efficiency by leveraging new technology such as RFID within the Group. I am pleased with the increase of 8.6% in the Lindex division's digital channels during the quarter. Both divisions also continued to work towards our sustainability goals.
Lindex Group continues to investigate strategic alternatives for the Stockmann department store business, and we expect to finalise the assessment in 2024. We also aim to end the restructuring process as soon as possible. At the same time, we continue to focus on our daily business, securing commercial and operational efficiency.
I am excited about the upcoming season. By delivering exceptional service, showcasing our best products, and creating memorable experiences for our customers, we can make this Holiday season successful. I would like to thank all our employees for their continued efforts and commitment to our strategic goals.
KEY FIGURES
7-9 | 7-9 | 1-9 | 1-9 | 1-12 | |
Revenue, EUR mill. | 222.1 | 226.9 | 666.5 | 677.4 | 951.7 |
Revenue growth, % | -2.1 | -7.0 | -1.6 | -4.5 | -3.1 |
Local currency revenue growth, % | -2.6 | -1.7 | -2.2 | 0.7 | 1.6 |
Digital share of revenue, % | 17.8 | 16.2 | 17.7 | 16.5 | 16.8 |
Digital revenue growth in local currencies, % | 6.7 | 8.4 | 5.3 | 2.5 | 2.7 |
Gross profit, EUR mill. | 129.3 | 132.9 | 388.8 | 396.4 | 554.2 |
Gross margin, % | 58.2 | 58.5 | 58.3 | 58.5 | 58.2 |
Adjusted operating result, EUR mill. | 15.8 | 20.6 | 38.8 | 49.8 | 80.0 |
Adjusted operating margin, % | 7.1 | 9.1 | 5.8 | 7.3 | 8.4 |
Operating result, EUR mill. | 15.0 | 20.3 | 27.7 | 47.6 | 76.5 |
Operating margin, % | 6.8 | 9.0 | 4.2 | 7.0 | 8.0 |
Net result for the period, EUR mill. *) | 1.8 | 8.7 | -6.5 | 42.0 | 51.7 |
Net debt excluding IFRS 16 items, EUR mill. | 7.2 | -36.1 | -65.6 | ||
Equity ratio, % | 29.2 | 29.1 | 29.9 | ||
Equity ratio (excluding IFRS 16 items), % | 61.9 | 58.8 | 60.5 | ||
Inventories, EUR mill. | 198.6 | 193.3 | 162.9 | ||
Operating free cash flow, EUR mill. | -24.7 | -12.2 | -40.5 | 2.9 | 70.8 |
Capital expenditure, EUR mill. | 8.4 | 24.0 | 25.2 | 53.6 | 65.1 |
EPS, basic, EUR **) | 0.01 | 0.05 | -0.04 | 0.27 | 0.33 |
Number of employees, average | 6 109 | 6 168 | 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 (1-9 2023) were impacted by a positive tax decision for Lindex Holding AB (former Stockmann Sverige AB).
**) Earnings per share declined to EUR -0.04 (0.27) due to the lower net result as explained above and an increased number of shares compared to the previous period (1-9 2023).
ITEMS AFFECTING COMPARABILITY (IAC)
EUR million | 7-9/ | 7-9/ | 1-9/ | 1-9/ | 1-12/ |
Operating result | 15.0 | 20.3 | 27.7 | 47.6 | 76.5 |
Adjustments to operating result | |||||
Costs related to restructuring programme and other disputes | 0.2 | 0.3 | 10.7 | 0.8 | 2.6 |
Costs related to strategic and organisational development | 0.5 | 4.8 | 0.8 | 2.3 | |
Insurance claim settlement for losses related to COVID-19 | 0.0 | -4.4 | |||
Loss on disposal of subsidiary shares | 0.0 | 0.6 | 0.6 | ||
Other operating income from lease modifications of sale-and-leaseback items | -2.1 | ||||
Adjusted operating result | 15.8 | 20.6 | 38.8 | 49.8 | 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 Stockmann division has four strategic must-win areas, which are to elevate offering by increasing focus on premium and luxury, grow and leverage loyal customer base, optimise omnichannel performance and improve 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) has validated the Group's climate target.
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.
Interim Report
This company announcement is a summary of the Lindex Group's Interim Report 1 January - 30 September 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.
Webcast for analysts and the media
A media and analyst briefing will be held in English as a live webcast today, on 25 October 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
Henrik Henriksson, 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
