CEO Jari Latvanen, Stockmann Group’s Interim Management Statement, Q1/2023 (28.4.2023):
The Stockmann Group had a positive start to 2023. Both the Lindex division and the Stockmann division strengthened sales and profitability,although the macro-economic situation in our operating countries continued to be challenging. Our strengthened performance is a result of the excellent work of our dedicated employees, supported by the strong customer and brand loyalty enjoyed by Lindex and Stockmann. Both brands thrive and evolve thanks to carefully curated collections and services as well as our strong sustainability agenda and actions. We will continue driving forward our strategic priorities in multiple areas to accelerate growth in both divisions.
During the quarter, we improved the Group revenue by 1.2% to EUR 198.5 million. The growth in revenue was due to good sales development in the Stockmann division with an increase of 15.8%. The improved sales were driven by a healthy increase in the number of visitors and successful commercial activities. The first three days of the revamped five-day-long Crazy Days campaign contributed to the sales of the quarter. Sales of the Lindex division improved by 0.7% in local currencies but decreased by 5.6% in reported currency. The sales grew in seven of nine of the division’s own markets and lingerie was the strongest category.
The Group’s adjusted operating result for the quarter increased by EUR 1.3 million and stood at EUR -2.4 million (-3.7) thanks to increased sales and efficient cost control. Lindex improved its already good profitability level and the Stockmann division made progress as well.
Although the business environment continued to be volatile, we succeeded in serving our existing loyal customers well and attracting new ones. The Lindex division continued increasing the number of new registered customers and improved brand awareness in the two largest markets of the division, Sweden and Norway. Customers appreciate Lindex’s strong sustainability agenda, which has contributed to the strengthened brand image. The Stockmann division made good progress in customer experience, with the Emotional Value Index (EVI) rising during the quarter from 59 to 62. Moreover, the number of new loyalty programme members of the Stockmann division increased from the comparison period.
In the Lindex division, we are making considerable investments in improving the overall digitalisation to meet customers’ expectations and to enable efficient scaling of the business – all contributing to further global, digital and sustainable growth in line with our strategy. The ongoing construction of the new EUR 110 million omnichannel distribution centre is proceeding well, and it is planned to be taken into operation in 2024. I also want to highlight the development of Lindex’s strategic offering, which includes innovations such as the well-received new femtech brand, Female Engineering. The new brand contributed to the success of the lingerie category and its strong sales during the first quarter.
As for the Stockmann division, we are carrying out a change where the traditional department store is being transformed into a destination hub that offers customers an inspiring environment not only for shopping but for entertainment and socialising as well. We are therefore refocusing and reinventing our Helsinki flagship experience. As the first step of this journey, a new inspirational children’s world has been built in the Helsinki flagship store. As an example of the offering development, the biggest toy store in the Nordics, Pieni Lelukauppa (Little Toy Store), was opened in March as part of the new children’s department.
Another example of the ongoing strategic repositioning is an expanded range of luxury and affordable luxury brands, which will provide interesting growth potential and an enhanced offering for our customers. After the reporting period, French fashion house Louis Vuitton’s store opened in Stockmann’s Helsinki flagship store. The partnership is an important step towards the targeted position.
I am especially pleased with our improved performance considering the headwind caused by the operating environment. Regardless of the fact that inflation levels remained high and had an adverse impact on consumer confidence and purchasing power, we still succeeded increasing our revenue and improving our adjusted operating result. The positive development in a difficult retail landscape proves the validity of the strategic choices related to the existing categories of both divisions. We are preparing for the future by evaluating strategic options and financing for the period after the corporate restructuring.
I extend my warmest thanks to our wonderful employees in the Lindex and Stockmann teams for their great contribution and customer focus during the quarter. I also want to thank our customers, partners and other stakeholders with whom we are sharing and together developing the inspiring strategic journey of Stockmann Group.