Lindex Q1 on Friday: Performance forecasted to be similar as last year

Translation: Original comment published in Finnish on 4/23/2024 at 11:39 pm EEST

Lindex reports its Q1 result on Friday morning. We expect the company to perform largely at the level of the comparison period. Lindex's guidance is that this year’s adjusted EBIT will be 70-90 MEUR, i.e. the mid-point is 80 MEUR. We expect the company to reiterate the guidance.

Revenue forecasts predict growth for Lindex and a decline for Stockmann

At Group level, we expect revenue to be almost at the level of the comparison period. However, on segment level, we expect Lindex to grow by 2% in euros and approximately 3% in local currencies, but Stockmann’s revenue to decrease by 5%. In addition to a weak market, Stockmann’s development is also depressed by the timing of the Crazy Days campaign in Q2 and the floor area of the Itis department store decreasing last spring.  

Earnings forecast at the level of the comparison period and seasonally in the red

We forecast adjusted EBIT to be -2.8 MEUR, which is practically the same level as in the comparison period. Q1 is the seasonally weakest period for Lindex as for retail trade in general and typically loss-making. At segment level we also expect the results to be in practice at the level of the comparison period, i.e. Lindex will generate a positive result of 5 MEUR and Stockmann -7 MEUR. Lindex’s gross margin was 65.1% in the comparison period, which we expect will decrease and eliminate the benefits of small revenue growth. In the Stockmann division, we believe that cost savings will compensate for the impact of reduced revenue.

Guidance likely to remain unchanged

Stockmann's guidance is that revenue will grow by 1-3% in local currencies in 2024 and adjusted EBIT will be 70-90 MEUR. We expect the company to reiterate its guidance, although the rather detailed guidance may require updating during the year, as we saw last year. Our growth forecast is approximately 2% and adjusted EBIT forecast 77 MEUR. SEK and NOK have weakened since the Q4 report, which puts a small downward pressure on our forecasts and earnings guidance.

We do not expect any news in the Q1 report concerning the strategic assessment of department stores. After the company’s name change was implemented and the assessment has been ongoing for six months, we believe that solutions in this regard are starting to be possible even though the company has only commented that the assessment will be completed this year. In terms of the restructuring process only two disputed claims remain and we believe the company is well placed to complete the restructuring process this year, as we have previously estimated.