Fiskars Group - Santa Claus already done buying gifts - ABG

EBIT guidance 17% below cons. for Q4'22e
The previous FY'22 adj. EBIT guidance indicated positive y-o-y growth vs. FY'21 adj. EBIT of EUR 154m. Tonight's update now guides for EUR 150m adj. EBIT for FY'22, a 3% y-o-y decline. With one quarter left to report in the fiscal year, the guidance implies Q4'22e adj. EBIT of EUR ~29m, 17% below Factset consensus' EUR 35m. We believe the comment points to a volume-driven margin miss onlower-than-anticipated demand, and see no reason to suspect operational issues.

Retailers' inventories key cause for concern
Repeating the wording in the Q3 report, Fiskars Group continues struggling with US big box retailers' inventory levels. This was known ahead of today's update; we believe Fiskars' Terra customers are looking at more in-season purchasing than pre-season purchasing for '23e. We lower Terra Q4'22e EBIT by EUR 4m on slightly lower sales as we expect opex levels to be constant despite order cancellations. What is new in the update, however, is the lower in-season ordering in the Vita segment related to the holiday assortment, the timing of the update could imply that most of the US holiday shopping was instead done during Black Week. We lower Vita sales for Q4'22e by 6%, resulting in 14% lower Q4'22e adj. EBIT for the segment. The lower retailer deliveries means that Fiskars' inventories are likely to increase somewhat in Q4'22e, but we continue to expect a positive FCF for the quarter.

Share trading at 12-11x '23e-'24e EV/EBIT, 15-14x '23e-'24e P/E
On the back of the update, we lower group sales and EBIT estimates by 1-3% and 5-7% for '22e-'24e respectively. The larger dependence on retailer in-season as opposed to pre-season purchasing lowers visibility into '23e, and we lower our fair value range to EUR 13-22 (EUR 15-24) on the back of estimate revisions and the resulting higher uncertainty.

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