Lindex Group Q2’24 flash comment: Close to expectations, no major news

Translation: Original comment published in Finnish on 07/19/2024 at 9:17 am EEST 

Lindex Group’s revenue was at the level of the comparison period and the result decreased slightly, both coming in a tad below our forecasts. The guidance which was updated earlier this week naturally remained unchanged. The release contained no new information concerning the restructuring process or strategic evaluation.

The timing of the Crazy Days campaign supported revenue, Lindex surprisingly weak

The Group’s revenue was at the level of the comparison period and decreased by 1% in local currencies. This was driven by a 4% decline in the Lindex segment (5% in local currencies), which was surprisingly subdued even considering the weak market (our expectation was zero growth). The Stockmann segment grew as expected due to the timing of the Crazy Days campaign. In H1, however, the Stockmann segment’s revenue decreased slightly.

Continued strong sales margin in the Lindex segment supported the result

The Group’s adjusted EBIT was almost in line with our forecast, around 30 MEUR. The results by division were also close to what we expected. The adjusted EBIT of the Lindex division fell to 31 MEUR, compared to a very good EUR 36 MEUR in the comparison period. Contrary to our expectations, the gross margin improved further to 67.5% from the strong comparison period (66.8%), which compensated for the weaker revenue and slightly higher fixed costs than we expected. As expected, the Stockmann division improved to around break-even, driven by revenue growth and improved cost efficiency. The reported result was depressed by restructuring disputes settled in spring, which resulted in additional costs for the company.

Updated guidance from earlier in the week remained unchanged

Lindex, naturally reiterated the guidance it had updated on Monday and expects 2024 revenue to change by +/- 2% in local currencies and adjusted EBIT to be 70-90 MEUR (80 MEUR last year). After H1, revenue has dropped by 2% and adjusted EBIT has also decreased, so the guidance indicates a slightly better H2 than last year.

Since the Q1 report, the company has had only one controversial dispute related to the restructuring process. We believe this dispute with LocalTapiola is in court proceedings, and nothing new was reported about it in the Q2 report. However, we believe that the dispute will be settled later this year, after which the restructuring process will be concluded. This will also enable the possible structural change (i.e. the sale of the Stockmann division) to proceed.