Lindex Group Q1’25 flash comment: Lindex division result slumped due to logistics problems

Translation: Original published in Finnish on 4/29/2025 at 9:30 am EEST.

Lindex Group's Q1 result missed the comparison period and our estimates. This was due to lower-than-expected revenue and earnings in the Lindex division, weighed down by challenges related to the transition of logistics centers. However, the company reiterated its guidance for the full year, expecting full-year revenue growth of 0-4% in local currencies and an adj. EBIT of 70-90 MEUR. Weak Q1 puts downward pressure on forecasts. There was no new information on the restructuring process and the strategic review in the report. 

Revenue below comparison period and expectations

The Lindex Group's revenue decreased by 3% in local currencies, roughly the same for both divisions. For the Stockmann division, this was in line with our forecasts due to the weak market, but we expected better for Lindex division based on the positive development of its main market (Sweden). It appears that the Lindex chain has underperformed the market in the first few months of the year. The company attributes this to temporary supply delays related to the ramp-up of its new distribution center. In a project of this magnitude, minor problems are not surprising in themselves, but it is, of course, almost impossible to predict their timing from the outside.

Result missed comparison period and our estimates

The group's adj. EBIT deteriorated to -9 MEUR, whereas we expected a slight improvement to -4 MEUR. The Stockmann division's result improved slightly more than we expected, but the Lindex division's result was at zero compared to our expectation of 5 MEUR (Q1’24: 4 MEUR). The gross margin of the Lindex Division improved from the comparison period and was slightly better than our forecast, but lower revenue and higher fixed costs weighed on the result. To the extent that these are largely due to temporary challenges in ramping up the logistics center, a small earnings disappointment will not have a material impact going forward. Q1 is seasonally by far the weakest quarter of the company and typically loss-making. The figures included a small one-off charge, and financial expenses were burdened by exchange rate fluctuations of more than 2 MEUR, which pushed the reported result clearly into the red.

Guidance unchanged, downward pressure on estimates due to Q1

Lindex reiterated its guidance and expects the change in revenue to be 0-4% in local currencies and adjusted EBIT to reach 70-90 MEUR in 2025. The performance in Q1 was significantly weaker, with revenue down 3% in local currencies and earnings deteriorating (adj. EBIT in 2024 was 75 MEUR, so the midpoint of the guidance indicates a slight improvement this year). Before the Q1 result, our forecast was for an adj. EBIT of 79 MEUR. Even if the challenges in the Lindex division were temporary, the weak Q1 result in itself puts downward pressure on the full-year forecast.