Stockmann raised its earnings guidance again

Translation: Original comment published in Finnish on 11/13/2023 at 7:12 am EET

Stockmann updated its guidance on Friday for the second time this year by lowering the top of its revenue guidance and raising and tightening its earnings guidance. The company now expects adjusted EBIT to be EUR 75-90 million, while our forecast is EUR 80 million. We are slightly below the mid-points of the new guidance in terms of both revenue and EBIT. We do not make forecast changes at this stage, but the pressure in the forecasts is slightly upwards, considering the new guidance.

Revenue guidance was revised downwards

Stockmann revised its revenue guidance and now expects full-year revenue to be EUR 940-970 million, while the previous guidance was EUR 940-1,000 million and last year’s revenue was approximately EUR 980 million. According to the company, the guidance change is due to changes in currencies (SEK and NOK) that affect Lindex's revenue, while the outlook in local currencies remains the same as in the updated guidance issued in July before the Q2 result. Our EUR 948 million estimate is, therefore, well in line with the new guidance. As we noted in our comment last week, October was good in the Swedish clothing market and brought small upward pressure to Lindex's forecasts, which is somewhat supported by the updated guidance (mid-point 955 MEUR). However, at this stage, we do not see a need to update our revenue forecast when the most important months of the quarter are still ongoing/ahead.

Earnings guidance was raised and tightened

Stockmann raised its guidance for adjusted EBIT and now expects it to be EUR 75-90 million, compared to the previous range of EUR 65-85 million and EUR 80 million last year. Thus, the range was both raised and tightened slightly, and the mid-point rose from EUR 75 million to EUR 82.5 million. The company says this was due to Lindex’s continued strong performance. However, the company has never specified its expectations between the Stockman and Lindex divisions. For nine months, Stockmann has accumulated EUR 50 million in adjusted EBIT, so the Q4 expectation is now EUR 25-40 million, which is still a fairly broad range for one quarter. However, it indicates that the company expects an improvement from last year’s Q4, which was EUR 26 million. Our forecast is EUR 80 million, which is slightly below the mid-point of the guidance, as is our revenue forecast. Stockmann has guided cautiously throughout the year, so unless something surprising happens in the market, we do not expect that the company’s results to be at the bottom of this guidance either. We believe that the potential upside in the forecasts is mainly directed at Lindex.

CMD next week

Next Thursday, Stockmann will hots a CMD for the first time in over ten years. During the CMD, we expect more information about the company’s strategy for the next few years, Lindex’s growth outlook when the new distribution center is completed next year, and some kind of financial targets for both divisions. The event can be watched on Inderes TV on November 16 starting at 1 pm EET.