Lindex summer improvement boosts Stockmann but group still challenged
today Oct 26, 2018
Finnish retailer Stockmann had good news and bad on Friday, saying that it swung back into profit on an adjusted operating basis in Q3, even though overall revenue in the three months to September 30 fell.
Consolidated revenue in the period fell to €232.5 million from €242 million a year earlier, but at constant currency rates it rose 0.3%. Also in constant currency, the gross margin rose to 58.7% from 56.2%, while adjusted operating profit was €5.9 million, from a loss of €1.4 million in the prior year period.
However, unadjusted operating profit was actually a loss of €4.9 million, although that was a strong improvement on the €151.4 million loss of a year ago. A discrepancy between the adjusted and unadjusted figures was caused by a value adjustment of €10.8 million related to it divesting Nevsky Centre.
Given the negative impact that currency exchange had on the results, it's clear that this is a big issue for the company and it said that its full-year revenue guidance has been updated, mainly due to weakening currency rates, although profit guidance for 2018 is unchanged.
The company now expects its overall revenue for 2018 to be lower than in 2017, but its adjusted operating profit should improve this year.
CEO Lauri Veijalainen said: “Our strategic actions are producing results and we are moving forward. In the third quarter, Lindex’s sales and profitability continued to increase due to a strong start to the autumn season and Lindex increased its market share in its main markets. The adjusted operating result nearly doubled due to higher sales, improved gross margin and cost savings measures.”
That's good news, yet the company’s Stockmann Retail operation may have seen its operating profits improving slightly, but they were still negative.
However, the company is taking action to improve its performance. The Click & Collect service point, which is open every day until midnight, was opened in the Helsinki department store and its online selection has grown significantly. It announced the launch of a new marketplace that will open in spring 2019, which will “open our digital doors to partners and broaden our selection further.”
Yet more work certainly needs to be done. In its Crazy Days campaign, which took place after the quarter in October, sales were down by 9% from the previous year in total. The online store had strong growth of 7%, but sales in the Finnish and Baltic physical stores have struggled and that online increase won't be enough to make up for their decline.
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