Lindex continues to grow but Stockmann is still struggling

Lindex Group has reported underlying revenue growth for its first quarter but said the result was dented by the timing of its Crazy Days sales campaign and freight costs.

The company used to be known at Stockmann after its famous Finnish department stores, but recently renamed to reflect its bigger and more successful Lindex division.

It said Q1 group revenue fell 2.8% on a reported basis and 3.2% currency-neutral to €192.8 million, but as mentioned, the underlying figure rose if the Crazy Days-linked revenue was factored out.

The Lindex division’s revenue rose 2.7% in local currencies, reaching €130.6 million with sales growing in all main markets. But Stockmann’s revenue fell from €72 million to €62.2 million, mainly due to the timing of that Crazy Days campaign.

Overall, digital’s share of revenue rose to 18.8% from 17.8% a year ago with digital revenue rising 2.4%. The group’s gross margin was almost level with the comparison period at 56.3% (it had been 56.4% a year ago).

However, the adjusted operating loss widened to €6.5 million from €2.4 million this time last year. The company had managed to stay in profit for last year as a whole despite that Q1 loss and expects to do so this year too.

Its guidance was unchanged and it expects its full-year revenue to increase by 1%-3% in local currencies compared to 2023. Adjusted operating profit is estimated to be between €70 million and €90 million.

Looking at the two units, Lindex’s adjusted operating profit was down from €5.6 million to €4.2 million, “mainly explained by higher freight costs due to unexpected logistic challenges in the Red Sea”.

Stockmann meanwhile saw its losses ballooning from €7 million to €9.4 million, influenced by the Crazy Days issue as that campaign started in March this time while it had begun in April last year.

That all comes as the firm said 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 stagnant GDP development or slow growth in the company’s key markets. But at least inflation is forecast to continue declining from high to targeted levels, although the situation may vary between the group’s markets. And “disruptions in supply chains and international logistics during the year cannot be excluded either”.

CEO Susanne Ehnbåge added that: “During the first quarter, we progressed well with strategy implementation in both divisions. The group continues to investigate strategic alternatives for the Stockmann department stores business, and we expect to finalise the assessment in 2024.”