Stockmann takes major impairment charge on uncertain Lindex prospects
Stockmann has updated its guidance and written down the value of its Lindex chain following an ‘impairment test’ for the business, even though Lindex’s performance has been fairly strong in recent periods.
The book value of Lindex’s intangible assets has been adjusted to €368 million due to Covid-19 as the “ongoing and re-escalated pandemic increases uncertainty in Lindex’s main markets and the short-term business environment is challenging”.
Overall, it adds up to a €250 million in impairment related to Lindex’s goodwill that will be reflected in the firm’s fourth-quarter consolidated income statement. The writedown will be reported as an adjustment, and it has no cash flow impact.
The retail giant also said that total group revenue for 2020 will be lower than in the previous year.
“Despite a profitable fourth quarter and the robust performance of Lindex, the full-year operating result will be slightly loss-making,” it explained. “The impairment related to Lindex’s goodwill will increase the reported operating loss”.
The firm’s fourth quarter was “associated with greater uncertainty than normal due to the coronavirus situation,” it said.
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