Lindex Group: Last dispute settled; restructuring likely to end in the fall

Translation: Original published in Finnish on 6/9/2025 at 4:16 pm EEST.

Lindex announced today that it has reached an agreement with LocalTapiola regarding the last disputed debt related to the restructuring process. As a result, the company will apply for the termination of the restructuring program, which, in our understanding, will take a couple of months to finalize. For the first time, the company states directly that the restructuring dispute has also affected the strategic review of the department store business, but no further details were provided. The company has previously said that it will announce the results of the assessment by the end of June, so news on that front is also expected in the near future. We believe that the company will try to sell the department store business, which will be facilitated by the end of the restructuring. The news is therefore positive for the company and the stock.

Agreement finally reached in the last restructuring dispute

Since the spring of 2024, Lindex has only had one disputed debt remaining from the restructuring. This is a dispute related to the termination of the lease agreement for the Tapiola department store with the landlord, LocalTapiola. In this context, Lindex was ordered in arbitration to compensate LocalTapiola a total of 19 MEUR for the termination of the lease. Of this amount, just over 3 MEUR has already been paid and the remaining 16 MEUR has been recorded as a provision in Lindex' results but has not yet been paid. According to the agreement now made, Lindex will pay LocalTapiola less than 16 MEUR in additional compensation, but the exact amount was not disclosed at this stage. We had assumed the payment of 16 MEUR in compensation in our forecasts, so the settlement is slightly better than our expectations in terms of cash flow.

However, what is much more important is that with the settlement of the last dispute, the company will be able to end the restructuring period that has lasted for more than five years. The last dispute could have taken years in court, which would also have made it more difficult to sell the department store business. Technically, the termination of the restructuring still requires a decision from the District Court after the final debt has been paid, which, to our understanding, will take a couple of months, meaning that the restructuring could be officially terminated sometime next fall. The end of the restructuring process enables, among other things, dividend distribution, refinancing, and facilitates possible structural changes, i.e., the sale of the department store business.

The end of the restructuring should enable the announcement of the sale of department stores in the near future

The company announced back in late 2023 that it would launch a strategic assessment of its department store business, the Stockmann division. In practice, we believe the review means that the process of selling department stores is in progress. The schedule was extended around Christmas 2024 from the end of last year to the end of H1'25. Now, the company is commenting for the first time that the prolongation of the restructuring process has also affected the strategic evaluation. With the end of the restructuring in sight, we believe the company can now also announce the sale of the department stores. This could happen before the announced end of June, or the final announcement could be delayed until next fall, when the restructuring will be officially completed. In any case, the deal will probably be completed only after the restructuring is officially over. Of course, at this stage it is not certain whether a buyer has already been found for the Stockmann department stores or whether negotiations are still required to complete the deal. In our view, the sale of the department store business would likely have a positive impact on the stock.