Stockmann fine-tuned its guidance, Q2 result on Friday

Translation: Original comment published in Finnish on 7/18/2023 at 6:52 am.

Stockmann updated its guidance for the whole year by slightly lowering its revenue guidance (about 2%) and raising the adjusted operating result guidance by EUR 5 million or about 7%. Our revenue estimate was at the bottom of the previous guidance and our operating result estimate was at the top, so the relatively small guidance changes were in line with our expectations and do not give rise to immediate estimate changes. Stockmann will report its Q2 result on Friday.

Small changes to the guidance in expected directions

Stockmann revised its guidance and now expects the full-year revenue to be EUR 940-1,000 million (previously 960-1,020 MEUR, 2022: 980 MEUR) and adjusted operating result to be EUR 65-85 million (previously 60-80 MEUR, 2022: 69 MEUR). Stockmann justifies the decrease in the revenue range with the weakened Swedish krona and Norwegian krone, while the raised operating result range is due to stronger than expected gross margins and successful execution of cost saving measures. Our revenue estimate for 2023 is EUR 980 million, which does not yet consider the effect of the Swedish krona that has weakened a bit more during the summer. Our adjusted EBIT estimate is EUR 80 million. Stockmann's Q1 was a strong in terms of the result and margins and a small change in the guidance, and the reasoning is very logical. Our estimates are well within the current guidance and we see no need for immediate estimate changes. We will update our estimates as usual in connection with the result.

We expect Q2 revenue to fall due to weakened currencies

As regards Q2, we expect revenue to have fallen by 4%, mainly due to the weaker Swedish krona and Norwegian krone pushing Lindex’s sales development into the red. For the Stockmann division, we expect an increase of 1%. The sales of Finnish department stores and hypermarket chains grew faster than this in April-May, so we see a risk of a slight positive surprise. However, the recent guidance update indicates that our revenue estimate for the whole year is well in line with the company's view.

We also expect the result to decrease from a very strong (Lindex) comparison period

We expect Stockmann’s adjusted operating result to reach EUR 31 million in Q2, compared to EUR 35 million in the comparison period. This is due to the expected decline in Lindex’s result, partly due to the fall in revenue generated by currencies and partly due to the excellent comparison period, as Q2'22 was the best quarter in Lindex’s history. We still feel that Lindex’s result is at a very good level with our estimates (32 MEUR vs. e.g. pre-COVID Q2’19 at 19 MEUR). We expect the result of the Stockmann division to remain slightly negative (-1 MEUR).