Lindex owner Stockmann has better Q3 but second wave could dent Q4
The company said revenue fell 6.8% currency-neutral to €207.6 million in the July to September quarter. But the firm’s gross margin rose to 57.4% from 56.4%. And it made an operating profit of €11.7 million, better than €2.1 million a year ago.
The improvement during the third quarter can be seen when comparing its results with those for the year-to-date. For the nine months to September, consolidated revenue fell 16.1% to €558.7 million, with the margin dropping to 55.3% from 56.2% and an operating loss of €21.9 million after a €9.1 million loss in the prior year. It was clear that the first half was a brutal one taking in the height of the pandemic and various lockdowns in Europe.
The firm said visitor trends in physical stores started to recover “towards a normal level during the third quarter until the changes resulting from the Covid-19 pandemic affected the business at the end of the period. The coronavirus pandemic is still the main reason for the decline in sales despite the solid growth trend in digital sales”.
As that statement shows, even though Q3 was better than the first half, the company still sees plenty of uncertainty for the fourth quarter.
“The Covid-19 pandemic has a significant negative impact on the entire Stockmann Group’s business operations,” it explained. “The fourth quarter is associated with greater uncertainty than normal due to the coronavirus situation. Revenue for the year 2020 will be on a lower level than in the previous year and the operating result will be loss-making”.
But CEO Jari Latvanen said the group showed a “strong [Q3] performance in both the Lindex and Stockmann divisions as a result of enhanced sales activities as well as implemented cost efficiency measures. Under the current exceptional circumstances in the operating environment, Stockmann Group performed well during the period. Despite the decline in revenue, the group’s operating profit improved, and cash amounted to €132 million”.
The company has focused heavily on its digital operations this year and said that during the latest quarter, Lindex continued its digital expansion and launched on Zalando.
And on the product front, it saw the launch of the new underwear brand called Closely in which Lindex has been a partner and an investor since the project started two years ago.
Additionally, as part of efforts to “explore new business models and ways of prolonging the lifetime of garments, Lindex is testing second-hand sales of kids’ outerwear in some selected stores”.
Meanwhile, the Stockmann division updated its business strategy during the period, aiming “to respond to changes in the operating environment and consumer behaviour by focusing on customer relationships and loyalty; developing an omnichannel customer experience; inspiring customers in the selected categories fashion, beauty, home, food and beverages; improving a customer-centric culture; and concentrating on profitable business”.
The division continued its revamps of several department stores during the third quarter and said its “premium position was further strengthened by adding several designer brands”. Additionally a new natural cosmetics department in the Helsinki flagship was opened.
The Stockmann division also launched two new collections for its own brands.
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