Lindex Group Q3’24 preview: Steady development expected

Translation: Original published in Finnish on 10/23/2024 at 7:28 am EEST.

Lindex Group will report its Q3 results on Friday at 8:30 am EEST. We expect revenue and adjusted EBIT for the Group to be broadly in line with the year-ago period. The upper end of the full-year adjusted EBIT guidance of 70-90 MEUR seems high, so it may be slightly narrowed and/or lowered. Our forecast is 74 MEUR. As the year progresses, we expect to hear more from the company, both on the fate of the latest restructuring dispute and on the results of the strategic review of the department stores.

Group revenue likely to remain at the same level as last year

We expect the company's revenue to be in line with the comparison period. The Lindex division is expected to grow by 1% in local currencies as the market development in Sweden, its main market, is slightly positive. We expect the Stockmann division's revenue to decline 3% due to weak market development in Finland. We estimate that exchange rates had a small but positive impact in the quarter.

Earnings also almost flat

We expect the Lindex division's adjusted EBIT to increase slightly to 27 MEUR from 26 MEUR in the comparison period. This is mainly due to the positive impact of the small increase in the top line. In the Stockmann division, we expect the negative impact of the decline in revenue to be offset by the cost efficiencies and the result to remain at the level of the comparison period (-5 MEUR). The Group's profit forecast is set at 21 MEUR, practically at the level of the comparison period.

Our forecast is below the midpoint of the guidance range

Lindex's guidance for 2024 is for revenue to change by +/- 2% in local currencies and for adjusted EBIT to be in the range of 70-90 MEUR. Our forecast is slightly below the midpoint, as our revenue forecast is slightly negative and our adjusted EBIT forecast is 74 MEUR. We expect the company to repeat its revenue guidance, but for EBIT, the company may lower the upper end of the range.

For the past six months, the company has had only one controversial dispute related to the restructuring process. We believe this dispute with LähiTapiola is in court proceedings and should be resolved in the near future. 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. If Lindex had news on these matters, we believe that it should be disclosed separately and not in the earnings report. It may be that the company will have nothing new to report on these issues in the Q3 report. We wrote more about the company’s situation in our recent update.