Lindex woes weigh down more buoyant Stockmann fashion ops
Lindex, Finnish retailer Stockmann’s troubled fashion operation, is continuing to drag down the results of its parent company, the firm said on Friday. While Stockmann’s own turnaround is progressing, albeit slowly, Lindex is still at the stage of sales and margins dropping with only a little cheer on the horizon.
So whats the story? Stockmann said that the first nine months of this year saw an adjusted operating loss of €1.4m compared to a year-ago profit of €4.8m, which doesn’t exactly look like the “progress” it was talking about.
But the fact is, its retail operating earnings and real estate earnings both rose. However, Lindex’s earnings dipped €10.2m and dragged down the final figure. Lindex also saw its gross margin dipping (albeit only slightly) to 56.2% from 56.6%. Meanwhile its revenues from continuing operations dropped to €740m from €827.8m and its comp sales were down by 2%.
This all meant that Stockmann’s overall adjusted operating loss rose to €12m from €4.1m a year ago but its reported operating loss ballooned to €162m from that €4.1m figure. Again, Lindex was to blame as the business recorded a €150m impairment charge.
What did the management team have to say about all this? CEO Lauri Veijalainen described its “determined journey” continuing in Q3 and talked up a 4.6% comp sales improvement for Stockmann Retail in its domestic Finnish market and in the Baltics. There was also news of the retail unit seeing “growth particularly in fashion”.
That was helped by marketing support put behind fashion and a new inspirational lifestyle magazine that it introduced last month, as well as new labels and seasonal pop-ups being launched.
But while Stockmann fashion looks to be on a roll, Lindex is still rolling downhill. It struggled in July and August, although the CEO said it improved last month.
The parent company is doing all it can to turn its troubled child around with a mixture of cost cuts, new campaigns, new collections and more.
But it seems that this won’t come soon enough to rescue the full-year performance with the firm having already downgraded its profits guidance last month.
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