Stockmann Q3 on Friday: Structural change is a more important driver than the result

Translation: Original comment published in Finnish on 10/25/2023 at 7:17 am EEST

Stockmann will publish its Q3 report on Friday at around 8.00 am EEST. We expect revenue to have decreased slightly from the comparison period, but the result will be at the level of the comparison period. We have slightly cut our forecasts for this year in this report. We believe the company will reiterate its full year guidance in the Q3 report. Our adjusted EBIT estimate is EUR 80 million, while the company guidance is EUR 65-85 million.

We expect Q3 revenue to fall due to weakened currencies

In terms of the Q3 result, we expect revenue to have fallen by 3%, mainly due to the weaker SEK and NOK depressing Lindex’s sales development into the red. The Swedish clothing market grew during Q3 and we also expect Lindex’s revenue to grow in local currencies. For the Stockmann division, we expect a 1% drop in revenue.

We expect the result to be on par with the comparison period

We expect Stockmann’s adjusted EBIT to reach EUR 22.5 million in Q3, roughly on par with the comparison period (22.2 MEUR) and the consensus. Our earnings estimates for the divisions are also very close to last year’s levels, with Stockmann close to zero and Lindex generating the Group’s result.

Our full year forecasts are within the guidance ranges

Stockmann expects that its revenue for 2023 will be EUR 940-1,000 million (2022: 980 MEUR) and adjusted EBIT EUR 65-85 million (2022: 69 MEUR). Our revenue estimate is EUR 956 million, while our earnings forecast is EUR 80 million. In connection with this preliminary comment, we slightly cut our forecasts for this year based on the development in the Swedish clothing market and currency changes. With only a few months left in the year, we feel Stockmann could narrow its guidance ranges a little. However, we consider it more likely that the company will reiterate its guidance in the Q3 report.

No further information likely on the department store situation in the 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, thus, no substantial additional information on this matter is likely in the near future. The company is also 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.