Stockmann Q4 on Friday: Strong year-end performance expected

Translation: Original comment published in Finnish on 2/6/2024 at 6:00 am EET.

Stockmann will report its Q4 results on Friday at around 8.00 am EET. We expect revenue to have grown slightly from the comparison period and an increase in earnings. We expect this year's guidance to anticipate a decline in the result from the strong level of 2023. Stockmann will not pay a dividend while the restructuring process is still ongoing.

We're predicting a small increase in revenue

We expect Stockmann's Q4 revenue to have increased by 1%. This is supported by the timing of the Stockmann Division’s Crazy Days in Q4 (which weakened Q3 revenue), but weighed down by further weakening SEK and NOK year-on-year. The Finnish clothing market has also been weak towards the end of the year, as noted in this comment. In local currencies, we forecast 2% growth for Lindex, while its largest market, Sweden, grew by 1%. Stockmann has guided for full-year revenue of 940–970 MEUR, while our forecast is 952 MEUR.

Guidance points to a strong Q4 result

Following the Q3 result, Stockmann raised its guidance for the 2023 adjusted EBIT and is expecting it to be 75–90 MEUR. For nine months, Stockmann has accumulated 50 MEUR in adjusted EBIT, so the Q4 expectation is now 25-40 MEUR, which is still a fairly broad range for one quarter. However, it indicates that the company expects an improvement from last year’s Q4, which was 26 MEUR. We expect both divisions to improve their result from the comparison period. Our estimate for the whole year is 82 MEUR, i.e., around mid-point of the guidance.

We expect a declining result this year

We forecast Stockmann’s revenue to grow by just over 2% this year, but the adjusted EBIT to decline around 10 MEUR to 72 MEUR as Lindex margin weakens. We believe that the combination of weak demand, competition and growth investments will push Lindex's results below last year, although staying at a very good EBIT margin level (above 12%). However, this is below the division's long-term target (15%), which it nearly reaches in our 2023 forecasts. Stockmann cannot pay a dividend while the restructuring process is still ongoing. We do not expect further information on the strategic review of department stores in the Q4 report. Instead, we think we might hear something about progress on the outstanding restructuring disputes.