Translation: Original published in Finnish on 07/18/2025 at 09:05 am EEST

Lindex Group's Q2 result missed the comparison period and our estimates. The Lindex division's gross margin decreased a bit more than we expected from a strong comparison period, and at the same time, revenue was slightly weaker, but fixed costs were higher than we expected. Lindex reiterated its guidance for full-year revenue growth of 0-4% in local currencies and adjusted EBIT of 70-90 MEUR. This requires relatively better performance in H2 compared to H1, which the company expects to be supported by a pick-up in demand. However, the weak quarter will push our estimates down.

Source: Inderes

Revenue remained practically at the level of the comparison period

Lindex Group's revenue grew by 1% and was at the level of the comparison period in comparable currencies. We expected 3% growth. Lindex division's revenue grew by 1.5% (we expected 3%) and only marginally in comparable currencies, as we expected.
 As can be deduced from market figures, the late start to the summer weighed on the markets in April and May. Stockmann division’s revenue was also at last year's level, while we expected a slight increase. However, the company says its sales have grown faster than the fashion category. The company does not mention the closing of Itis, so it apparently had no material impact in either direction on the quarterly figures.

Earnings missed expectations and the comparison period due to the Lindex division

The adjusted EBIT of the Lindex division fell to 23 MEUR, compared to 31 MEUR in the comparison period and our 29 MEUR expectation. The gross margin for the comparison period was exceptionally strong (67.5%) and we expected it to normalize. The gross margin was 64.5%, while we expected 65.5%. The company says this was due to sales promotions. Considering the market situation, however, we still feel the gross margin is at a very good level. Revenue also slightly missed our expectations and fixed costs were a bit higher than we estimated. Fixed costs were partly depressed by growth in e-commerce, where the company's operations are not yet as efficient as they will be once the new logistics center is fully operational, as the transfer of logistics centers is still ongoing. So, the division performed slightly weaker than we expected in all respects, which led to a clearly weaker result than we had forecast. The Stockmann division's result improved slightly to positive territory from -1 MEUR in the comparison period, although we expected somewhat better, i.e. 1 MEUR. A better-than-expected gross margin compensated for lower revenue, and fixed costs were slightly higher than we expected. The Lindex division's adjusted EBIT was 22 MEUR, well below the 31 MEUR of the comparison period and our 29 MEUR estimate. 

Guidance unchanged, but requires a pickup in H2

Lindex reiterated its guidance and expects the change in revenue to be 0-4% in local currencies and adjusted EBIT to reach 70-90 MEUR in 2025. For H1, revenue decreased by 1% and EBIT decreased by some 10 MEUR. This means that reaching the guidance requires a better performance in H2 than last year. The company believes that consumer demand will improve in the second half of the year, which supports the guidance. Even before the Q2 result, our estimates were closer to the bottom of the ranges, and with poor earnings, they will decline further. 

No new information on the restructuring and strategic assessment at this stage

In June, the company announced that the final restructuring dispute had been settled and approved in the district court. The company also announced yesterday a share issue related to the restructuring debt, so we believe the last debt has now been paid. With this, the completion of the restructuring is only subject to official approval by the court, which the company expects to receive during Q3. The company announced at the end of June that the strategic review of the department store business, i.e. the Stockmann division, which has been ongoing for almost two years, will continue, and the results will be announced by the end of the year. We still believe the company is aiming to exit the department store business. The results of the strategic review will likely be announced after the restructuring has officially ended. We commented on the end of the restructuring and the strategic review in more detail in  our latest report.