Stockmann challenges remain in Q3, Lindex stronger so could it be sold?
Lindex owner Stockmann said Wednesday that the group’s strategic transformation continued in Q3, although the July to September period still saw its sales and gross margin falling. And the company also said that it’s looking at “strategic alternatives” for the ownership of Lindex, which it sees as having “great potential.”
The company said that Lindex’s updated strategy for 2019–2023 has been approved with the aim being to further strengthen international growth and in particular its digital transformation. But will that transformation happen under the current set-up for the firm?
Perhaps not. “Lindex has a strong market position in the Nordics, with a rapidly growing e-commerce business, well-performing flexible store network, and improving profitability,” Stockmann said. “The board of directors sees great potential in Lindex, and has therefore decided to investigate strategic alternatives for the company’s ownership. The process is developing as planned.” It gave no further details about its thinking for the chain.
Looking at the overall company’s Q3 performance, Stockmann’s consolidated revenue from continuing operations dropped 1.8% at comparable currency rates to €225.3 million, while the gross margin was down to 56.4% from 58.7% a year ago. Operating profit was €2.1 million, which was much better than the loss of €4.9 million in the prior year. Adjusted operating profit was €5.4 million, down from €5.9 million, or up from €1.4 million excluding the Nevsky Centre.
The company, which also operates its eponymous department stores, said its Lindex chain had strong Q3 sales and improved its operating result. Sales increased in all markets and Lindex continued the rollout of its new e-commerce platform and launched a new partnership with Sweden-based fashion retailer Boozt that operates across mainland Europe and the UK. Since the period end, Lindex also opened its first franchise store in a new market, Denmark, in October “with record breaking success,” we’re told.
CEO Jari Latvanen said of all this that the “transformation process is on track. We are implementing our strategy as planned and fully focusing on developing our operations in order to offer excellent customer service and inspiring experiences.”
But while he was able to talk up Lindex’s progress, the exec said the Stockmann division’s operating result improved slightly yet remained negative. Its revenue declined as rental income decreased due to real estate divestments and renovation works.
And the Crazy Days sales campaign, which took place after the quarter, in October, saw sales only “on a par with the previous year”. They rose 2% in Finland, but were down 8% in the Baltics, although the e-store had strong growth at 11%.
A two-year transformation process has started, which aims to “position Stockmann as the number one source of inspiration of fashion, beauty and home,” the company said. “Much effort will be put into excellent customer service and inspiring customer experiences. Stockmann will develop its fashion, beauty and home selection to fit into the needs of the defined customer groups, and create newness with unique and sustainable brands. The company will also position itself for growth in the Baltics, both in the fashion and grocery businesses.”
Part of the transformation will include cost-cutting measures with a savings target of at least €40 million by spring 2021.
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