Stockmann warns on profits as Lindex sales growth proves elusive
Finnish fashion and department store retail giant Stockmann continues to be challenged with news that Q4 was weak and it will fall short of its 2017 profit expectations.
The company has been suffering from slowing sales in markets such as Finland and Russia and the rise of e-tail. This has seen it exiting one fashion chain and naming a new turnaround-focused CEO for its troubled Lindex fashion operation.
But while it has stayed upbeat, after its new profit guidance and preliminary Q4 sales report on Thursday, analysts questioned its turnaround prospects.
So what exactly was the problem in Q4? It said that revenue reached €315 million and in “comparable” businesses “was on a par with the previous year,” which means it didn’t actually make any progress on sales growth. At Lindex, comparable revenue actually dropped 1%.
For the full year, overall group revenue fell 1% to €1.056 billion at ongoing businesses (that is, excluding comparisons with any operations it has closed or sold).
Operating profit won’t reach the level it had predicted in September. Back then it had said it would be flat or slightly lower than the €30.9 million of a year earlier. But it now expects operating profit from continuing ops to be around €12 million.
And Lindex adjusted operating profit is estimated to be around €13 million, “significantly lower” than the €54.9 million of the prior year after the firm said margins continued to be squeezed and cost savings won’t feed through until this year.
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