Stockmann

During the past week, Stockmann has raised its earnings guidance and published an updated strategy and financial targets in connection with its CMD. These caused small positive changes, but on the whole, we do not feel there were any major news.

Today, Stockmann announced its updated strategy and new financial targets separately for the Lindex and Stockmann divisions. Stockmann will open its strategy and targets more at the CMD on Thursday.

Stockmann updated its guidance on Friday for the second time this year by lowering the top of its revenue guidance and raising and tightening its earnings guidance. The company now expects adjusted EBIT to be EUR 75-90 million, while our forecast is EUR 80 million. We are slightly below the mid-points of the new guidance in terms of both revenue and EBIT. We do not make forecast changes at this stage, but the pressure in the forecasts is slightly upwards, considering the new guidance.

The October figures for the Swedish clothing market were published this morning. Comparison figures to 2019 levels are no longer published, but the comparison figure for October 2022 (vs. 2019) was 0%, i.e., sales were 4% above pre-pandemic levels due to price increases.

The decline was strongest in the clothing product group (-12%), which, we believe, hits Stockmann the hardest, but also has an impact on both Tokmanni's and Kesko’s consumer goods trade. The total grocery (daily goods) trade grew by 5.1%, which was still driven by price inflation, but the trend has been turning since the start of the year and we expect volumes to slowly pick up as inflation eases. As expected, the food service market slowed down by 1.6% from the previous year, which Kespro’s sales figures sort of reflected.

Stockmann’s Q3 result was slightly below our expectations and the comparison period, explained by the timing of the Crazy Days campaign. Lindex exceeded both the comparison period and our expectations.

Stockmann Group’s revenue and result decreased from last year, but this was mainly due to the timing of Stockmann division’s Crazy Days campaign, which we had not properly considered in our forecasts either. Lindex, on the other hand, improved its result from the comparison period and exceeded our forecast. The Group’s guidance for the whole year remained unchanged, and we do not expect any major forecast changes based on the report.

We expect Stockmann's revenue to have decreased slightly from the comparison period, but the result will be at the level of the comparison period. We have slightly cut our forecasts for this year in this report. We believe the company will reiterate its full year guidance in the Q3 report. Our adjusted EBIT estimate is EUR 80 million, while the company guidance is EUR 65-85 million.

The September figures for the Swedish clothing market were published this morning. Comparison figures to 2019 levels are no longer published, but the comparison figure for August 2022 (vs. 2019) was 3%, i.e., sales were at pre-pandemic levels. Sales were slowed by exceptionally warm weather. During January-September, the market has grown by 2.5% and Q3 growth was just over 3%.

The Finnish Grocery Trade Association (Päivittäistavarakauppa ry PTY) reported that the revenue of department store and hypermarket chains (K-Citymarket, Prisma, Sokos, Tokmanni, Minimani and Stockmann) grew by 7.3% in August.

Stockmann’s decision to investigate strategic alternatives for the Department Stores business concertizes the company’s direction and it seems like the company is serious about creating value by seeking a structural arrangement for department stores.

Stockmann announced today that it is planning to change the name of the company to Lindex and is investigating strategic options for the Department Stores business. Analyst Rauli Juva comments on the news.

Stockmann announced today that it is planning to change the name of the company to Lindex and is investigating strategic options for the Department Stores business. The investigation is expected to be completed in 2024. Stockmann also announced a capital markets day to be held in November. We feel selling the department stores would be clearly positive for the value of the company.