Lindex Group: We are discontinuing coverage

Translation: Original published in Finnish on 10/2025 at 7:45 am EEST.

We discontinue our coverage of Lindex Group as the company has terminated its research service agreement. Due to the termination of coverage, we no longer issue a recommendation (was Buy) or target price (was 3.50 EUR) for the share. The company's multi-year restructuring process ended in August, but the strategic review of the department store business, which is important for the share's value, is still ongoing. 

Restructuring and strategic review have dominated recent years

We initiated coverage of the then Stockmann in November 2022. The company started a restructuring process already in September 2023, when it launched a strategic review of options for its department store business and announced it was considering changing its name to Lindex. The name change took place the following spring, but the strategic review has already been extended twice. The delay has partly been attributed to the restructuring process that began in 2020 and was finally completed in August 2025. The company has stated that it will announce the results of the strategic review in the latter half of 2025, effectively by the end of the year. We have considered it likely that the company will seek to divest its department store business.

In terms of earnings, the past few quarters have been weaker

The company's adjusted EBIT developed quite steadily in 2022-24, being in the range of 75-80 MEUR. However, the adjusted EBIT for the last 12 months is only 65 MEUR, as the Lindex division's result has declined. The company guides for an adjusted EBIT of 70-90 MEUR for this year, which indicates a profit level similar to previous years. However, this requires an improvement in earnings in the latter part of the year, with Q4 playing a significant role as it accounts for over half of the full year's earnings. By next year, the company's earnings should also be supported by the Lindex division's new logistics center, which has incurred additional costs this year during its ramp-up, but which should enable growth and reduce costs in the future. The Stockmann division has been able to improve its results in recent years but is still slightly loss-making at the EBIT level. Considering the rental costs, which are partly reflected in financing expenses, we estimate the Stockmann division to still be clearly unprofitable.

Structural change plays a big role in valuation

In our view, Lindex Group's valuation is complicated particularly by the department store business's unprofitability and lease liabilities, which distort valuation multiples. As the company is conducting a strategic review of its department store business and potentially divesting it, we see the sum-of-the-parts model as the best valuation method. In our view, the most important factor for the company's value in the near future is the outcome of the strategic review. If the department stores can be divested even at a zero price, we believe it would have a clearly positive impact on the share's value. On the other hand, the department store business remaining with the company would be a clear negative driver. However, we see the risk as more to the upside, as we expect the company to seek to divest its department store business. After a potential sale of the department store business, we believe Lindex will seek to list the company in Sweden and consider selling its new logistics center property. These possible changes may also support the share in the future. Without the department store business, the company would be purely the Lindex chain, which could also be valued using traditional valuation methods.

Coverage of the share ends

Lindex Group's coverage has been based on a research coverage agreement between the company and Inderes. Unfortunately, we will no longer provide research coverage to our investor community and owners of Lindex as the company has terminated the agreement. We recommend that investors follow Lindex’ reporting and news feed. All of our previously published research on Lindex continues to be available in our service.