STOCKMANN plc, Financial Statement Release, 9.2.2024 at 8.30 EET
The Stockmann Group's Financial Statements Bulletin 2023
Stockmann Group's 2023 adjusted operating result improved. Record year for Lindex profitability.
October-December 2023:
The Stockmann Group's revenue was EUR 274.3 (272.6) million. The revenue increased by 0.6%, and in local currencies by 3.9%.
- The Lindex division's revenue decreased to EUR 168.2 (172.2) million. In local currencies, the revenue increased by 2.8% and sales grew in all main markets.
- The Stockmann division's revenue increased to EUR 106.1 (100.4) million due to the timing of the Crazy Days campaign. In autumn 2023, Crazy Days was held in October at the beginning of the fourth quarter, while in the comparison period, the campaign started in September.
The Group's gross margin was on par with the comparison period at 57.5% (57.4).
The Group's adjusted operating result strengthened to EUR 30.2 (26.1) million and improved in local currencies as well.
- The Lindex division's adjusted operating result declined to EUR 22.3 (23.0) million but improved slightly in local currencies.
- The Stockmann division's adjusted operating result improved to EUR 9.0 (3.3) million, mainly due to the timing of the Crazy Days campaign and successful cost-efficiency measures.
Operating result amounted to EUR 28.9 (24.6) million.
Net result declined to EUR 9.7 (17.6) million due to higher financing costs and increased tax expenses related to deferred taxes.
Earnings per share declined to EUR 0.06 (0.11).
January-December 2023:
The Stockmann Group's revenue was EUR 951.7 (981.7) million. The revenue decreased by 3.1% but increased by 1.6% in local currencies.
- The Lindex division's revenue decreased to EUR 633.1 (661.1) million. In local currencies the revenue increased by 2.7% and sales grew in all main markets.
- The Stockmann division's revenue decreased slightly to EUR 318.5 (320.6) million, impacted by the reduced size of the Stockmann Itis department store.
Gross margin improved to 58.2% (57.9).
Adjusted operating result was EUR 80.0 (79.8) million, and improved significantly in local currencies. 
- The Lindex division's adjusted operating result slightly improved to EUR 90.3 (90.0) million but strengthened significantly in local currencies.
- The Stockmann division's adjusted operating result was EUR -6.3 (-5.4) million.
Operating result was EUR 76.5 (154.9) million. The comparison year result was impacted by the capital gain of EUR 95.4 million from selling the real estates in Helsinki city centre and in Riga and a EUR 15.9 million provision related to the LähiTapiola Keskustakiinteistöt Ky arbitration decision.
Net result declined to EUR 51.7 (101.6) million due to lower operating result and higher interest expenses for leases, but was impacted positively by lower tax expenses.
Earnings per share declined to EUR 0.33 (0.65).
The Board of Directors will propose that no dividend be paid for the financial year 2023.
Guidance for 2024:
In 2024, the Stockmann Group expects its revenue to increase by 1-3% in local currencies compared to 2023. The Group's adjusted operating result is estimated to be EUR 70-90 million. Foreign exchange rate fluctuations may have a significant effect on the adjusted operating result.
Market outlook for 2024:
The market environment in 2024 is expected to remain challenging. The macroeconomic situation in Europe remains uncertain due to the continuing geopolitical instability. High interest rates and inflation are holding back economic growth, and the retail sector may be affected by lower consumer demand. Forecasts are indicating a stagnant GDP (Gross Domestic Product) development or slow growth in the company's key markets. Inflation is forecasted to continue declining from high to targeted levels. The situation may vary between the Group's markets. Disruptions in supply chains and international logistics during the year cannot be excluded either.
CEO Susanne Ehnbåge:
In 2023, the Stockmann Group focused on systematically building a solid and sustainable foundation for the future for both divisions, aiming to secure a long-term growth of shareholder value. Despite the challenging market environment marked by sustained high inflation, elevated interest rates and geopolitical uncertainties, the Group succeeded in enhancing its profitability. The keys to this improved performance include a strategic focus, prioritisation of key initiatives, and the team's dedication to achieving the goals.
As a result, the Group's 2023 adjusted operating result improved to EUR 80.0 (79.8) million. However, in local currencies the improvement was significant. The Lindex division outperformed the average market growth and reached an all-time record of EUR 90.3 (90.0) million adjusted operating result. In 2023, changes in foreign exchange rates had a negative impact of EUR 5.7 million on adjusted operating profit. The Stockmann division lagged slightly behind the comparison year, and its adjusted operating result totalled EUR -6.3 (-5.4) million. Without the negative impact of the reduced size of the Stockmann Itis department store, the division would have improved its performance. The Stockmann division improved its result during the second half of the year compared to the previous year.
Going forward, we have a clear plan to accelerate value creation. At our Capital Markets Day in November, we announced updated strategies and financial targets for the divisions. The Lindex division will continue to accelerate growth, transform into a sustainable business, and decouple cost from growth. The Stockmann division aims for growth and profitability improvement by elevating its offering towards luxury and premium segments, growing and leveraging the loyal customer base, and ensuring a seamless omnichannel experience. Additionally, there is a clear focus on operational efficiency and expanding revenue horizons.
The Stockmann Group's underlying business is developing in the right direction, and our financial position improved further in terms of free cash-flow, financing and equity in 2023. The current financial position serves as a solid foundation for further development and investments in the areas such as process efficiency and digitalisation, enabling the growth we seek. The construction of Lindex's new EUR 110 million omnichannel distribution centre is proceeding well, and we target it to be in operation in the autumn 2024.
In September, we announced that the Stockmann Group was commencing a strategic assessment to crystallise shareholder value by refocusing the Group's business on Lindex. As part of the strategic assessment, Stockmann plc is considering a name change to Lindex Group and will investigate strategic alternatives for the Stockmann department stores business. The assessment is ongoing, and we expect it to be finalised in 2024. In 2023, we also saw good progress in the restructuring process, which we aim to end as soon as possible.
In October, the Stockmann Group took an important step in climate change mitigation. We submitted our new climate target to the Science Based Targets initiative (SBTi) and defined a roadmap for both divisions to reach the target. The Group's target is to reduce climate emissions by 42% by 2030 compared to 2022. We expect to have validated science-based climate targets in 2024.
I would like to express my heartfelt gratitude to our team members at Lindex and Stockmann for their dedication and good work in 2023. I look forward to continuing our journey together with our partners and customers towards building a stronger, growing company and increasing shareholder value.
KEY FIGURES
+-------------------------------------------+------+------+-----+-----+
|                                           |10-12/|10-12/|1-12/|1-12/|
|                                           |2023  |2022  |2023 |2022 |
+-------------------------------------------+------+------+-----+-----+
|Revenue, EUR mill.                         |274.3 |272.6 |951.7|981.7|
+-------------------------------------------+------+------+-----+-----+
|Gross profit, EUR mill.                    |157.8 |156.5 |554.2|568.3|
+-------------------------------------------+------+------+-----+-----+
|Gross margin, %                            |57.5  |57.4  |58.2 |57.9 |
+-------------------------------------------+------+------+-----+-----+
|Operating result (EBIT), EUR mill.         |28.9  |24.6  |76.5 |154.9|
+-------------------------------------------+------+------+-----+-----+
|Adjusted operating result (EBIT), EUR mill.|30.2  |26.1  |80.0 |79.8 |
+-------------------------------------------+------+------+-----+-----+
|Net result for the period, EUR mill.*)     |9.7   |17.6  |51.7 |101.6|
+-------------------------------------------+------+------+-----+-----+
|Earnings per share, EUR **)                |0.06  |0.11  |0.33 |0.65 |
+-------------------------------------------+------+------+-----+-----+
|Adjusted earnings per share, EUR ***)      |0.07  |0.12  |0.16 |0.24 |
+-------------------------------------------+------+------+-----+-----+
|Cash flow total, EUR mill.                 |29.5  |27.8  |-30.3|-45.8|
+-------------------------------------------+------+------+-----+-----+
|Capital expenditure, EUR mill.             |11.5  |20.7  |65.1 |62.5 |
+-------------------------------------------+------+------+-----+-----+
|Equity per share, EUR                      |      |      |2.47 |2.15 |
+-------------------------------------------+------+------+-----+-----+
|Equity ratio, %                            |      |      |29.9 |26.2 |
+-------------------------------------------+------+------+-----+-----+
|Equity ratio excl. IFRS 16, %              |      |      |60.6 |53.4 |
+-------------------------------------------+------+------+-----+-----+
*) The full year 2023 net result declined due to lower operating result and higher interest expenses for leases, but was positively impacted by lower tax expenses as a result of a tax decision for Stockmann Sverige AB. The 2022 operating result was impacted by the capital gain of EUR 95.4 million from selling the real estates in Helsinki city centre and in Riga and a EUR 15.9 million provision related to the LähiTapiola Keskustakiinteistöt Ky arbitration decision.
**) Earnings per share declined to EUR 0.33 (0.65) explained by lower net result as explained above and an increased number of shares compared to the previous year.
***) Adjusted earnings per share are calculated based on the adjusted net result, which includes the tax impact of adjustments in the operating result. The tax impact is calculated at the transaction level and has been revised to also include changes in deferred taxes. Comparison figures have been restated.
ITEMS AFFECTING COMPARABILITY (IAC)
+-------------------------------+------+------+-----+-----+
|EUR million                    |10-12/|10-12/|1-12/|1-12/|
|                               |2023  |2022  |2023 |2022 |
+-------------------------------+------+------+-----+-----+
|Operating result (EBIT)        |28.9  |24.6  |76.5 |154.9|
+-------------------------------+------+------+-----+-----+
|Adjustments to EBIT            |      |      |     |     |
+-------------------------------+------+------+-----+-----+
|Gain on sales of real estate   |      |0.1   |     |-95.4|
+-------------------------------+------+------+-----+-----+
|Gain on lease modifications of |-2.1  |      |-2.1 |     |
|sale-and-leaseback items       |      |      |     |     |
+-------------------------------+------+------+-----+-----+
|Costs for disputed, conditional|1.4   |0.7   |1.1  |18.1 |
|and maximum restructuring debt |      |      |     |     |
+-------------------------------+------+------+-----+-----+
|Corporate restructuring cost   |0.4   |0.7   |1.6  |1.6  |
+-------------------------------+------+------+-----+-----+
|Costs related to transformation|1.6   |      |2.3  |0.4  |
|of organisation                |      |      |     |     |
+-------------------------------+------+------+-----+-----+
|Loss on disposal of subsidiary |0.0   |      |0.6  |     |
|shares                         |      |      |     |     |
+-------------------------------+------+------+-----+-----+
|Costs related to the war in    |      |0.1   |     |0.5  |
|Ukraine                        |      |      |     |     |
+-------------------------------+------+------+-----+-----+
|Employee insurance refund      |      |0.0   |     |-0.3 |
+-------------------------------+------+------+-----+-----+
|Adjusted operating result      |30.2  |26.1  |80.0 |79.8 |
|(EBIT)                         |      |      |     |     |
+-------------------------------+------+------+-----+-----+
STRATEGIES AND FINANCIAL TARGETS
The Stockmann Group's two divisions, Lindex and Stockmann, have their own strategies. The divisions share the view that customer centricity, an omnichannel approach, and strong brands are key strategic factors in building future growth. On November 13, 2023, Stockmann Group published updated strategies and new financial targets for the Lindex and Stockmann divisions.
The Lindex division's strategy builds on Lindex's purpose of empowering and inspiring women everywhere, targeting sustainable and profitable growth. The division's three strategic must-win areas are to accelerate growth, transform into a sustainable business, and decouple cost from growth. The Lindex division's financial targets and outcomes for 2023 and 2022 are presented in the table below.
+-------------------------------------------------------------+----+----+
|Financial targets for the Lindex division                    |2023|2022|
+-------------------------------------------------------------+----+----+
|3-5% annual local currency revenue growth in the mid-term and|2.7 |10.9|
|reaching an annual revenue of SEK 10 billion by 2030, %      |    |    |
+-------------------------------------------------------------+----+----+
|30% digital share of revenue in the mid-term, %              |19.0|18.5|
+-------------------------------------------------------------+----+----+
|15% adjusted operating margin in the long-term, %            |14.3|13.6|
+-------------------------------------------------------------+----+----+
The Stockmann division's customer-centric strategy builds on Stockmann's purpose of being a marketplace for a good life and aims to achieve profitable and sustainable growth. The division's three strategic must-win areas are to elevate offering, grow and leverage the loyal customer base, and ensure a seamless omnichannel experience. The Stockmann division's financial targets and the outcomes for 2023 and 2022 are presented in the table below.
+------------------------------------------------------------------+-------+-----+
|Financial targets for the Stockmann division                      |2023   |2022 |
+------------------------------------------------------------------+-------+-----+
|Revenue growth in line with market *) growth in the mid-term, %   |-0.6**)|10.0 |
+------------------------------------------------------------------+-------+-----+
|Reaching a positive free cash flow in the mid-term, EUR mill. ***)|-12.0  |-20.9|
+------------------------------------------------------------------+-------+-----+
|5% adjusted operating margin in the mid-term, %                   |-2.0   |-1.7 |
+------------------------------------------------------------------+-------+-----+
*) Stockmann addressable market in Finland, Latvia and Estonia, comprising of fashion, beauty and home categories. Market growth was 2.7% in 2023 and 7.0% in 2022.
**) The Stockmann division's revenue was negatively affected by the reduced size of the Stockmann Itis department store.
***) Free cash flow is calculated as EBITDA - adjustments - lease payments +/- changes in net working capital - capital expenditure.
The Stockmann Group has developed a science-based climate plan and target for the entire Group and its value chain. The Group aims to reduce the climate emissions from its own operations and its value chain by 42% by 2030 compared to 2022. Stockmann signed the Science Based Targets initiative (SBTi) in autumn 2021 and submitted its climate target to SBTi in October 2023. The Group expects SBTi to validate its climate target during 2024.
STRATEGIC ASSESSMENT
On 25 September 2023, Stockmann plc's Board of Directors decided to initiate a strategic assessment to crystallise shareholder value by refocusing the Group's business on Lindex. As part of the strategic assessment, Stockmann plc is considering a name change to Lindex Group and will investigate strategic alternatives for the Stockmann department stores business.
The possible name change would better reflect the Lindex division's role in the Group's business. Lindex represents over two thirds of the Stockmann Group's revenue and over the last years, Lindex has been the main profit contributor within the Stockmann Group. This possible name change would not impact the Stockmann department stores, which would continue to operate under the Stockmann brand.
As part of the investigation of strategic alternatives for Stockmann's department stores business, the company will evaluate the best environment for developing the business in the future. These options will include increasing the business' independence within the Group, considering possible ownership changes or strategic partnerships, or continuing under the current structure. The strategic assessment will not have any immediate impact on the Stockmann department stores' brand or its daily business operations, which will continue with full commitment on their ordinary course.
Decisions relating to a possible proposal on a name change, which would ultimately be subject to a decision by Stockmann plc's general meeting, will be made at a later date. Stockmann expects the strategic assessment to be finalised during 2024. Stockmann will provide an update on the strategic assessment if, and when, appropriate.
Financial Statements Bulletin 2023
This company announcement is a summary of the Stockmann's Financial Statements Bulletin 2023 and includes the most relevant information of the report. The complete report is attached to this release as a pdf file and is also available on the company's website at stockmanngroup.com (http://www.stockmanngroup.com).
Annual reporting 2023
Stockmann Group's Business Review, Financial Review, Remuneration Report, Corporate Governance Statement and Sustainability Review for 2023 will be published during the week beginning 26 February 2024 (week 9).
Financial releases in 2024
Stockmann Group will publish its financial reports in 2024 as follows:
- 26 April 2024, Interim Report for January-March
- 19 July 2024, Half year Financial Report for January-June
- 25 October 2024, Interim Report for January-September
Webcast for analysts and the media
A media and analyst briefing will be held in English as a live webcast today, on 9 February 2024 at 10:00 a.m. EET. The event can be followed via this link (https://stockmann.videosync.fi/q4-2023). The recording and presentation material will be available on the company's website after the event.
STOCKMANN plc
Susanne Ehnbåge
CEO
Further information:
Susanne Ehnbåge, CEO
Annelie Forsberg, CFO
Contact via Stockmann Group's media desk info@stockmann.com,tel. +358 50 389 0011
Marja-Leena Dahlskog, Head of Communications & IR, tel. + 35850 502 0060
Distribution:
Nasdaq Helsinki
Principal media