Release Date: April 29, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Stockmann division showed continuous profit improvement, marking the fourth consecutive quarter of positive results.
- Lindex division achieved digital growth, with digital sales accounting for 23.7% of total revenue.
- Successful launch of new e-commerce sites and customer apps in Sweden and Norway contributed to online growth.
- International expansion efforts included new store openings in Copenhagen and London, enhancing brand visibility.
- Gross margin improved to 57.4%, reflecting better sourcing and offering development.
Negative Points
- Overall revenue declined by 3% in local currencies, impacted by weakened consumer confidence and market volatility.
- Lindex division faced temporary revenue pressures due to supply delays and logistical challenges.
- Adjusted operating result decreased to minus EUR8.7 million, with Lindex division's result negatively impacted by higher operating costs.
- Cash flow was negatively affected by increased working capital and higher inventories, leading to a cash flow of minus EUR62.2 million.
- The transition to a new omnichannel distribution center caused disruptions, affecting product availability and sales.
Q & A Highlights
Q: Can you provide guidance on how much the fashion market declined for the quarter?
A: The consumer confidence has developed negatively throughout the quarter. In Finland, the fashion market declined by minus 1% compared to the previous year. In Sweden, data indicates a range from minus 4.1% to plus 5% during the quarter. Swedbank pay transaction data shows a decline from minus 20% in a single month to minus 14.5%. In Norway, the data shows both negative and positive developments, indicating a shaky market.
Q: Are you able to quantify the revenue impact of the distribution center disruption?
A: The logistic issues experienced during the first quarter, combined with the Leap Day impact, accounted for more than the full revenue drop compared to the previous year for the Lindex division. Both factors had a significant impact on revenue.
Q: What is the impact of tariffs on the group and its suppliers?
A: Rising geopolitical risks, including potential global trade wars, contribute to macroeconomic uncertainty. While not directly exposed to recent tariff changes, these developments add volatility to global supply chains and financial markets, indirectly impacting consumer confidence.
Q: Can you elaborate on the negative product mix regarding inventory?
A: During the transition phase for the new omnichannel distribution center, software issues led to delays in sending goods to sales channels. The situation improved by the end of April, with sufficient product mix availability in stores and e-commerce. Kidswear products were less impacted.
Q: Is this quarter expected to be a seasonal low in cash balance?
A: Historically, Q1 is a quarter with negative cash flow development, consistent with previous years. However, due to current inventory levels, the net working capital increase has resulted in a more negative cash flow than last year.
Q: What can we expect related to warehouse costs during the transitional period?
A: Transition costs are included in the financial planning and budget for 2025. Improvements in the new omnichannel distribution center are observed daily, although some negative impacts are natural in the early stages. The situation is improving.
Q: What is the rough annual rent for the two old Lindex warehouses planned for closure?
A: Approximately EUR3.5 million in rental costs will be eliminated once the warehouses in Partille and Boras are closed and operations are moved to the new OCD warehouse in Alingsas.
Q: What financial impact is expected from the closure of the Stockmann Itis department store in Helsinki?
A: No financial impact is expected from the closure of Itis on the profitability of the Stockmann division or the group.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
