Stockmann Q3 morning result: Lindex’s strong performance continued

Translation: Original comment published in Finnish on 10/27/2023 at 8:58 am EEST

Stockmann Group’s revenue and result decreased from last year, but this was mainly due to the timing of Stockmann division’s Crazy Days campaign, which we had not properly considered in our forecasts either. Lindex, on the other hand, improved its result from the comparison period and exceeded our forecast. The Group’s guidance for the whole year remained unchanged, and we do not expect any major forecast changes based on the report. Encouragingly, one of the restructuring disputes reached an amicable settlement in October, which promotes the termination of the restructuring program.

Revenue fell due to currencies and the timing of Crazy Days

Stockmann’s revenue decreased by 7% in Q3, mainly from negative impacts of currencies (in Lindex). In local currencies, the decline was 2%. Lindex grew by 5% in local currencies, and growth came from all major markets. Its revenue was slightly better than we expected. Stockmann division’s revenue fell by 16%, explained by the Crazy Days campaign occurring in Q4 this year, compared to Q3 last year. We had not properly considered this in our forecasts, so the Stockmann division clearly fell short of our forecasts. However, we believe that revenue development in department stores was negative even without the change in timing.

Result weakened slightly from the comparison period due to the Stockmann division

In terms of adjusted EBIT, the Group remained at EUR 20.6 million, which is lower than in the comparison period (22 MEUR). By division, Lindex’s gross margin was in line with our expectations at some 64%, but with slightly better revenue and cost levels, adjusted EBIT was a bit better at EUR 26 million (our forecast: 24 MEUR). Stockmann division’s result fell to EUR -5 million from last year’s zero level, which was also weaker than our expectations (-1 MEUR). This was logically the result of lower-than-expected revenue, which is partly compensated by lower fixed costs than expected. Stockmann division’s gross margin was slightly below our expectations, but not significantly.

Full-year guidance remains unchanged

Stockmann repeated its guidance, it expects the full-year revenue to be EUR 940-1,000 million (2022: 980 MEUR) and adjusted EBIT EUR 65-85 million (2022: 69 MEUR). Our revenue forecast has been at the mid-point of the range at EUR 970 million while our result estimate is EUR 80 million. Lindex performed well in Q3 and for the Stockmann division, we believe that the weakness was mainly caused by the timing difference of Crazy Days, which we had not properly considered in the quarterly forecasts. Thus, we do not see any significant change pressure in our full year forecasts based on this report.

Progress in restructuring disputes, CMD on November 16

Roughly a month ago Stockmann announced that it was considering strategic alternatives for the department store business. The assessment is due to be completed next year, and the Q3 report did not offer any news in this respect. Regarding legal disputes related to the restructuring, the report shows that Stockmann reached an agreement in one dispute in October, a dispute with Fennia insurance company concerning the Tampere department store. This is, of course, a positive development, because without settling disputes they could last a long time. However, there are still open disputes.

The company is organizing a CMD on November 16, where we expect Stockmann to tell more especially on its plans concerning Lindex and to publish some kind of financial targets.