CEO's review

 

CEO Jari Latvanen,  Stockmann Group’s Half year financial report Q3/2022 (28.10.2022):

Stockmann Group’s robust growth in the third quarter is a great achievement in the challenging market conditions within the retail sector. Both divisions increased physical and digital sales in local currencies, thanks to higher number of visitors and increased average purchases. 

The Stockmann division improved the gross margin despite higher costs of purchases, while Lindex’s gross margin decreased due to the unfavourable U.S. dollar to Swedish crown exchange rate. To continue growing and maintain a good customer value-based pricing, the currency increase has not been fully implemented to consumer end prices. In addition, Lindex’s other costs have increased due to higher investments within digitalisation and strategic growth expenses for new brands and due to a more normal operational environment without the pandemic’s effects or subsidies. 

The third quarter’s adjusted operating result decreased compared to a year ago. The Stockmann division delivered a positive adjusted operating result that was above last year due to higher sales. Lindex continues to deliver good results, but the extraordinarily good operating result from last year could not be reached owing to strategic growth expenses, unfavourable exchange rates and more normalised costs. 

The operating result was affected by a provision for prudential reasons of EUR 15.9 million, due to the arbitration decision related to LähiTapiola Keskustakiinteistöt Ky. The provision is recognised as an item affecting comparability in the income statement.  

During the third quarter, the Group’s cash flow was affected by significant capital expenditure when construction of Lindex’s new omnichannel warehouse commenced. The cash flow from ordinary operations was good, but was affected by higher inventories due to longer lead times and preparing for Christmas season. The Group’s liquidity remained strong and excluding lease liabilities and the bond there is no interest-bearing debt.

Our systematic implementation of sustainability initiatives and digital development is proceeding well in both divisions. We have strongly committed teams and I would like to thank them all for their good work.