Record quarter for Lindex: “A message of strength”
The clothing giant Lindex reports increased growth and a stronger result as sales in physical stores displace digital commerce. “This is a statement of strength. We have taken market shares,” says CEO Susanne Ehnbåge.Published: July 22, 2022, 8:52 p.mOn Friday morning presented the Stockmann group, which owns the clothing giant Lindex, its report for the second quarter of the year. Lindex increased revenues to SEK 1,966 million, an increase of SEK 327 million. The operating profit was summed up to SEK 390 million, 82 million better than the corresponding quarter in 2021. The long-established chain with roots in the Alingsås of the 50s has thus reached record levels during the second quarter – after a first quarter that was also strong – says CEO Susanne Ehnbåge.” This is a message of strength. We have taken market shares,” she says. The figures mean that growth increased by 18 percent in local currencies. Sales in physical stores increased by 23 percent, while digital commerce stagnated. A similar pattern could be noted when, at the end of June, H&M reported greatly increased sales, better results and a transition to trading in physical stores.Is the report a statement of strength for Lindex or rather a measure of how parts of the industry have benefited from the return to physical stores?
“Both us and H&M have benefited from sales standing on several legs. We were able to switch up e-commerce during the pandemic and physical sales when the restrictions disappeared,” says Susanne Ehnbåge. Lindex’s CEO emphasizes, however, that total sales are almost 22 percent above 2019’s level, that is, before the pandemic broke out. “We have hardly any stores that are not profitable. These are six stores in a portfolio that consists of over 400 stores.”During the entire quarter, digital sales decreased by around 3 percent, although in June they exceeded 2021 levels. However, the pandemic has had effects that make it difficult to compare the quarters, emphasizes Susanne Ehnbåge – who is overall very satisfied with the development. “Digital sales account for around 16 percent of sales now. When I started in 2018, it was 2 to 3 percent,” she says.The purchasing power of households decreases sharply as a result of rising inflation, increased interest rates and rampant energy and fuel prices. The macroeconomic development can thus have major consequences for consumer-oriented companies. However, Susanne Ehnbåge believes that Lindex is well positioned for worse times: “It is very difficult to assess the situation going forward, but if you look at our offer, I think we are standing firm.” The CEO points to the high proportion of underwear and children’s clothing, which she believes are prioritized by consumers and also less fashion-sensitive.”Fashion clothes are something you treat yourself to sometimes, while underwear and children’s clothes are always needed. In parallel with that, we have an offer that is very affordable. We are not in the higher price range,” notes Susanne Ehnbåge.Another worry cloud are the continued disruptions in global supply chains, which have primarily arisen as a result of the war in Ukraine. “We chose quite early on to put in buffer weeks, as we would rather get the goods in too early than too late. It has served us well.”The situation has improved and before the autumn season, it is not expected that the delivery problems will mean any serious disruptions to the business.”Unfortunately, however, we still feel the problems. We see certain delays, which requires other priorities and that we have to buy in goods earlier,” says the CEO. The CEO explains the cautious decline in the gross margin from 67.1 to 65.4 percent with currency effects, as the company largely trades in American dollars. The large fluctuations in the currency have thus affected the purchase prices. “We have tried to parry it, but the dollar has moved so much that it still affects,” says Susanne Ehnbåge. Despite the clouds of worry, the CEO looks to the future with confidence. During the first half of the year, efforts have been made to create clearer collections to make customers recognize Lindex garments in town, which should increase the value of the products. At the same time, the company has recruited many new customers, according to the CEO. “This makes us stand strong for the future,” she says.