Release Date: October 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- The Stockmann division showed profit improvement due to successful cost efficiency measures.
- Lindex division experienced strong digital growth of 8.6% during the quarter.
- The new omnichannel distribution center is expected to generate annual savings of EUR10 million by 2026.
- The Stockmann division's gross margin increased to 45.3% due to better clearance and inventory management.
- Lindex Group is implementing a new operating model to enhance decision-making and accountability, supporting future growth and profitability.
Negative Points
- The group's revenue for the third quarter declined by 2.1% due to lower stock availability and adverse market conditions.
- Lindex division's adjusted operating result declined to EUR21.1 million due to lower revenue and increased costs.
- Logistical challenges, particularly in Bangladesh, led to lower stock availability, impacting sales.
- The group's net result declined to EUR1.8 million, mainly due to lower revenue and increased costs.
- Lease payments have been increasing, particularly relative to revenue declines, due to contractual obligations and prolonged lease agreements.
Q & A Highlights
Q: Can you provide more detail on the nature of Lindex's logistical challenges?
A: Susanne EhnbÄge, CEO: The challenges are primarily due to political instability in Bangladesh, our largest sourcing market, and the aftermath of the Red Sea conflict. Additionally, we've outgrown our current warehouse capacity, which is why we're establishing a new warehouse to support our business and expansion.
Q: How large was the negative effect from logistical disruptions, and do you expect this to continue in Q4?
A: Susanne EhnbÄge, CEO: Approximately 60% of the revenue drop was due to lower stock availability. We expect improvements in stock availability, and the situation is looking better in October compared to September.
Q: Is there a risk of delay in the strategic assessment, given it's almost the end of 2024?
A: Susanne EhnbÄge, CEO: We expect to adhere to the previously communicated schedule and will communicate the results by the end of 2024.
Q: How did Lindex and Stockmann sales compare to the fashion market sales in Sweden and Finland?
A: Susanne EhnbÄge, CEO: In Finland, the fashion market declined by 5-6%, while in Sweden, it ranged from stable to a 12% drop. Lindex's revenue declined by 1.8% and Stockmann's by 2.8%, indicating we managed the market conditions well.
Q: Can you explain the key changes in Lindex's new operating model?
A: Susanne EhnbÄge, CEO: The new model focuses on faster decision-making, increased accountability, and strengthening the connection between product and brand. It aims to enhance planning efficiency and maximize returns on technology investments.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
