Stockmann Group’s Half-year financial report, 1 January – 30 June 2023

Stockmann Group’s second quarter impacted by exchange rates – Operational development level on the previous year

STOCKMANN plc, Half year financial report, 21.7.2023 at 8.00 EEST

 

Stockmann Group’s Half-year financial report, 1 January – 30 June 2023

 

Stockmann Group’s second quarter impacted by exchange rates – Operational development level on the previous year

 

April–June 2023:

• The Stockmann Group’s revenue was EUR 252.0 million (269.0). The revenue decreased by 6.3%, but in local currencies the decrease was 0.5%.
  - The Lindex division’s revenue decreased to EUR 176.2 million (188.0), but grew in local currencies by 2.0%.
  - The Stockmann division’s revenue decreased to EUR 75.8 million (81.0).
• The Group’s gross margin improved to 60.1% (59.4).
• Adjusted operating result of the Group was EUR 31.6 million (35.4), but was on par in local currencies.
  - The Lindex division’s adjusted operating result decreased to EUR 36.2 million (39.0), but improved in local currencies.
  - The Stockmann division’s adjusted operating result was EUR -3.5 million (-1.5).
• Operating result was EUR 30.2 million (114.5). The comparison figure was impacted by the capital gain of EUR 81.4 million from selling the real estate in Helsinki city centre.
• Net result amounted to EUR 13.8 million (80.7).
• Earnings per share (undiluted and diluted) were EUR 0.09 (0.52). The comparison figure was impacted by the capital gain of EUR 81.4 million from selling the real estate in Helsinki city centre.
• On 12 May 2023, Stockmann’s Board of Directors appointed Susanne Ehnbåge as Group CEO.
• After the reporting period on 17 July, Stockmann Group updated its financial guidance for the full-year 2023. 

 

January–June 2023:

• The Stockmann Group’s revenue was EUR 450.4 million (465.1) and decreased by 3.2%, but increased by 2.0% in local currencies.
  - The Lindex division’s revenue decreased to EUR 302.7 million (322.0), but grew in local currencies by 1.4%.
  - The Stockmann division’s revenue increased by 3.2% to EUR 147.8 million (143.1).
• Gross margin stood at 58.5% (58.7).
• Adjusted operating result was EUR 29.2 million (31.6), but increased in local currencies. 

- For the Lindex division, the adjusted operating result decreased to EUR 41.8 million (44.5), but grew in local currencies.

- For the Stockmann division, the adjusted operating result was EUR -10.5 million (-8.8).

• Operating result was EUR 27.3 million (124.3), where the previous year was impacted by the capital gain of EUR 95.4 million from selling the real estates in Helsinki city centre and in Riga.
• Net result for the period amounted to EUR 33.3 million (83.4).
• Earnings per share (undiluted and diluted) were EUR 0.21 (0.54). The comparison figure was impacted by the capital gain of EUR 95.4 from selling the real estate in Helsinki city centre and in Riga.

 

Guidance for 2023, updated 17 July 2023:
In 2023, Stockmann expects the Group’s revenue to be in the range of EUR 940–1 000 million and the Group’s adjusted operating result to be EUR 65–85 million, subject to foreign exchange rate fluctuation. The guidance is based on the assumption that the continuing high inflation will increase costs from 2022 and have an adverse impact on consumer demand. At the same time, the Stockmann Group continues taking firm measures to minimise the impacts of cost increases.
 

Previous guidance for 2023:
In 2023, Stockmann expects the Group’s revenue to be in the range of EUR 960–1 020 million and the Group’s adjusted operating result to be EUR 60–80 million, subject to foreign exchange rate fluctuation. The guidance is based on the assumption that the continuing high inflation will increase costs from 2022 and have an adverse impact on consumer demand. At the same time, the Stockmann Group continues taking firm measures to minimise the impacts of cost increases (Financial Statements Bulletin 2022, published on 24 February 2023).

 

Market outlook for 2023:
The current challenging geopolitical situation and the high inflation level are expected to continue. However, inflation is predicted to slow down compared to the latter part of the year 2022. The inflation, together with high interest rates, is forecast to have a negative impact on consumer confidence and purchasing power. The retail market is expected to remain challenging due to lower consumer demand and increased purchasing prices and operating costs. The risk of potential disruptions in the supply chains and international logistics cannot be excluded, either.
 

CEO Susanne Ehnbåge:
We at the Stockmann Group are now entering a new phase. We will accelerate and seek new growth, combined with improved profitability, while keeping a clear focus on sustainability. With great honour and excitement, I look forward to leading the Stockmann Group after taking over as CEO on 12 May 2023.

 

During the past years, the Stockmann Group has undergone major and extensive changes. After the  COVID-19 pandemic and as a part of the restructuring programme, all properties of the Stockmann division have been sold and all confirmed undisputed debts have been paid. The Lindex division has improved both its sales and profitability to record levels, while the Stockmann division has recovered to a great extent from heavy losses. I would like to thank all my colleagues and the Board of Directors for the good work completed so far.

 

The second quarter was characterised by a business environment of rising interest rates and continued high inflation that weakened consumers’ purchasing power. This, combined with the uncertainties related to the geopolitical tensions, continued to keep consumer confidence below average.

 

At the beginning of the second quarter, the challenges deriving from the operating environment, combined with a late spring, had a negative impact on fashion demand in several markets. However,  after mid-May, sales picked up significantly and in local currencies the quarterly revenue was at the previous year’s level for the Group, but decreased in EUR by 6.3% due to weak SEK and NOK.

 

Lindex division’s revenue increased in local currencies by 2.0% as Lindex succeeded in increasing sales in all main markets regardless of the notable general decrease of fashion sales. The revenue of the Stockmann division decreased by 6.4% during the second quarter, which was mainly explained by the timing of Stockmann’s Crazy Days campaign that contributed more to the first- than the second-quarter sales compared to the previous year. Additionally, the reduction in the size of the Itis store in Helsinki had a negative impact on revenue. There was continued strong increase in the number of new loyalty programme members in both divisions.

 

I am especially pleased that Lindex succeeded in improving the adjusted operating result in local currencies for both the second quarter and first half-year, despite the historically high US-dollar, increased raw material prices and overall inflation impact. At the same time, the Stockmann division increased the mix of clearance and promotion sales, which affected the result negatively. This, together with an adverse currency impact on the Lindex result, decreased the Group’s operating result for the period. In local currencies the Group’s adjusted operating result was on par with the previous year for the second quarter and even increased for the first half-year.

 

During the second quarter, the Group’s financial situation and equity ratio further improved and the Group showed positive cash-flow despite the ongoing investments and the payments of undisputed debts. In the middle of July we signed a loan agreement for a Revolving Credit Facility of EUR 40 million, which further improves the Group’s financial situation. Inventories are at a balanced level and have decreased compared to both the previous year and the end of first quarter.

 

As the Stockmann Group, we are committed to fair and responsible business practices, and to the Science Based Targets initiative (SBTi). During the reporting period, Stockmann’s Board of Directors approved our science-based climate targets. The work will proceed and be completed during 2023 in accordance with the schedule of the initiative.

 

We see the future to be exciting yet demanding, and we will strive for a future growth and profitability for both divisions. Lindex will enter new markets and sales channels, whereas the Stockmann division will continue its repositioning towards luxury and affordable luxury. Both divisions are making considerable investments in improving the overall digitalisation to meet customer expectations and improve process and cost efficiency. The ongoing construction of the Lindex division’s new EUR 110 million omnichannel distribution centre is proceeding well, and it is planned to be taken into operation in autumn 2024.

 

The Stockmann Group strives to end the restructuring programme as soon as possible. Our strategy work progressed during the second quarter, and we are evaluating our strategic options for the period after the restructuring programme.

 

I would like to thank all the fantastic team members at Lindex and Stockmann for their excellent collaboration and valuable support during my first weeks as the Group CEO. I would also like to thank our customers, partners and other stakeholders who are sharing and supporting our important transformation journey.

 

KEY FIGURES

 

	4–6/ 2023	4–6/ 2022	1–6/ 2023	1–6/ 2022	1–12/ 2022
Revenue, EUR mill.	252.0	269.0	450.4	465.1	981.7
Gross profit, EUR mill.	151.5	159.7	263.5	273.1	568.3
Gross margin, %	60.1	59.4	58.5	58.7	57.9
Operating result (EBIT), EUR mill.	30.2	114.5	27.3	124.3	154.9
Adjusted operating result (EBIT), EUR mill.	31.6	35.4	29.2	31.6	79.8
Net result for the period, EUR mill.	13.8	80.7	33.3	83.4	101.6
Adjusted earnings per share, undiluted and diluted, EUR *)	0.10	0.11	0.04	0.03	0.24
Earnings per share, undiluted and diluted, EUR **)	0.09	0.52	0.21	0.54	0.65
Cash flow total, EUR mill.	30.2	53.8	-35.1	-29.1	-45.8
Capital expenditure, EUR mill.	16.1	5.4	29.6	11.7	62.5
Equity per share, EUR			2.17	2.15	2.15
Equity ratio, %			28.0	25.6	26.2
Equity ratio excl. IFRS 16, %			58.4	53.0	53.4

 

ITEMS AFFECTING COMPARABILITY (IAC)

 

EUR million	4–6/ 2023	4–6/ 2022	1–6/ 2023	1–6/ 2022	1–12/ 2022
Operating result (EBIT)	30.2	114.5	27.3	124.3	154.9
Adjustments to EBIT
Gain on sales of real estate		-81.4		-95.4	-95.4
Costs for disputed, conditional and maximum restructuring debt	-0.3	1.5	-0.3	1.5	18.1
Corporate restructuring cost	0.4	0.4	0.9	0.5	1.6
Costs related to transformation of organisation	0.8	0.3	0.8	0.4	0.4
Loss on disposal of subsidiary shares	0.6		0.6
Costs related to the war in Ukraine				0.4	0.5
Employee insurance refund					-0.3
Adjusted operating result (EBIT)	31.6	35.4	29.2	31.6	79.8

 

*) Adjusted earnings per share is calculated based on adjusted net result, in which the tax impact of adjustments in the operating result is included. The tax impact is calculated on transaction level and it has been revised to also include changes in deferred taxes. Comparison figures have been restated.
**) The key figure is impacted by a positive tax decision of EUR 29.6 million for Stockmann Sverige AB during the first quarter of 2023. The comparison figures were impacted by the capital gain from selling the real estate in Helsinki during the second quarter of 2022 (after tax impact EUR 66.2 mill.) and the capital gain from selling the real estate in Riga during the first quarter of 2022 (after tax impact EUR 14.1 million).

 

Half-year financial report
This company announcement is a summary of Stockmann's Half-year financial report for January – June 2023 and includes the most relevant information of the report. The complete report is attached to this release as a pdf file and is also available on the company's website at stockmanngroup.com.

 

Webcast
A press and analyst briefing will be held in English as a live webcast today, on 21 July 2023 at 10:00 a.m. EEST. The event can be followed via this link. The recording and presentation material will be available on the company's website after the event.

 

Further information:
Susanne Ehnbåge, CEO, via Stockmann Group’s media desk tel. +358 50 389 0011
Annelie Forsberg, CFO, via Stockmann Group’s media desk tel. +358 50 389 0011
Marja-Leena Dahlskog, Head of Communications & IR, tel. + 358 50 502 0060
[email protected]

 

www.stockmanngroup.com

 

STOCKMANN plc

 

Susanne Ehnbåge
CEO

 

Distribution:
Nasdaq Helsinki
Principal media