Good morning, everyone. I'm Susanne Ehnbåge, CEO of Lindex Group. I would like to warmly welcome you all to our webcast, where we will go through the key highlights of our January and March 2026 financial performance. I have with me, as always, our CFO, Henrik Henriksson. Now, let's continue to the agenda on the next page. We will start with the highlights of Q1 business updates for the two divisions in Lindex and Stockmann, and then look at the financials more closely. We will finish with an update on our way forward, and after our presentation, we will have time for your questions. We can now move on to the next page, please.
Let's begin with our business update for Lindex Group, as well as the Lindex and Stockmann divisions and let's first take a look at the consumer confidence levels in our key markets on the next page. Our home markets still report relatively low consumer sentiment levels, as we can see on this page. In all three countries, Finland, Sweden, and Norway, the consumer confidence decreased towards the end of the quarter and deteriorated further in March due to the increased geopolitical tensions. We of course monitor this evolving situation closely. Let's now have a look at the group level key messages on the following page. During the first quarter, Lindex Group's revenue increased while the adjusted operating result declined. Lindex division's revenue grew by 5.8% despite a temporary negative impact on the digital sales related to the transition to our new warehouse facility.
The adjusted operating result was negatively affected by the transition-related warehouse cost. An important milestone was reached as Lindex e-commerce operation were successfully transitioned to the new facility, enabling the closure of the final standalone warehouse. The consolidation of all warehousing and also logistics operations is expected to improve both costs and operational efficiency and to support future growth. I'm pleased with the Stockmann division's continuous profit improvements during the quarter. Successful cost efficiency measures have resulted in these improvement steps. Lindex division opened its second own Lindex store in Denmark. The expansion further strengthens Lindex Nordic presence. In December 2025, the board of directors announced that the valuation of the strategic alternatives for the Stockmann department store business will continue, and the outcome of the strategic assessment will be communicated once appropriate. We can now move on to the next page, please.
To sum up our Q1 revenue development, the Lindex Group's revenue increased to EUR 193 million. The revenue increased by 3.7% and 0.8% in local currencies. The Lindex division's revenue increased by 5.8% and by 1.5% in local currencies. The Stockmann division's revenue was on par with previous year, and the revenue grew in comparable terms. The group's adjusted operating results decreased to EUR -11.9 million. The Lindex division's adjusted operating result decreased to EUR -4.3 million, mainly due to higher operating costs and depreciation related to the transition and the ramp-up of the new distribution center. The Stockmann division's adjusted operating result was EUR -6.2 million. Let's take the next page, please, where I will focus on the Lindex division. Our e-commerce operations were transitioned to the new distribution center in February.
All garments are now handled at our new facility in Alingsås, and our last standalone warehouse in Borås was closed in March. The consolidation of our operations into our highly automated omni-channel warehouse represent a major milestone for Lindex. The e-commerce transition, unfortunately, had a temporary negative impact on the warehouse operations and also customer deliveries, which affected digital sales during the period. As a result, the revenue from the digital channels decreased by 10.5% in local currencies during the quarter. However, operations have gradually stabilized, and by the end of April, we're seeing more normalized e-commerce performance. Looking more closely at the Lindex division, we can see that the revenue development was supported by a strong commercial offering and proactive clearance activities. Physical store sales increased by 5.2% during the quarter.
Lingerie was the best performing category, and a refreshed delicate lace lingerie assortment, together with swimwear, contributed to strong results in Q1. In February, the new lingerie floor plan was rolled out across all stores with early results indicating improved performance. We also continued our expansion in Denmark with the opening of our second store at the end of March, located in Odense at Rosengårdcentret, one of Denmark's largest shopping centers. We have also expanded further through Magasin du Nord with successful openings in Odense, Aarhus and Lyngby. Strengthening our physical presence remains a key part of our growth strategy and also supports greater accessibility to our assortment. Overall, the number of active customers continued to grow during the quarter. Another highlight of the period was the publication of Lindex Group's CSRD report outlining our sustainability efforts with a focus on climate, circularity, and also human rights.
The Lindex division made strong progress, reaching 91% recycled or more sustainably sourced materials in 2025 towards our target to reach 100% in 2026. In addition, 74% of our products includes at least 15% recycled content, exceeding Lindex 2026 target of 70%. Let's continue on the next page, focusing on the Stockmann division. Stockmann focuses on the execution of the division's strategic priorities, and that continued to strengthen the financial performance also during this quarter. The division delivered its eighth consecutive quarter of profitability improvement, supported by systematic efficiency measures, comparable revenue growth, and also proactive inventory and assortment management. Strong performance in the division's main category, fashion, contributed positively to both revenue development and also gross margin.
During the quarter, the offering was further strengthened through well-received new brand launches, such as the globally strong-performing SKIMS brand, which supported both traffic and conversion in both stores and online. After the reported period, the 40th anniversary Crazy Days campaign delivered a stronger year-on-year performance. In addition, the online store was nominated Online Store of the Year. We can then move on to the next page, please, with our guidance. Our guidance remains, and we expect the revenue in local currencies to grow compared to 2025. The group's adjusted operating result is estimated to be between EUR 70 million-EUR 95 million, and foreign exchange rate fluctuations may have a significant effect on the adjusted operating result. With that, I would like to hand over to Henrik to walk us through the financials.
Great. Thank you, Susanne. Now let's look more closely into the fourth quarter, and we can go to the next page, please. Current slide presents the Lindex division's revenue and adjusted operating result for the first quarter, 2026. As Susanne already mentioned, the Lindex division's revenue increased 5.8% and ended up at EUR 133.7 million. In local currencies, the revenue increased by 1.5%. The revenue development was driven by a strong commercial offering, supported by effective clearance sales activity during the quarter. Looking specifically into our physical stores, our revenue increased by 5.2% in local currencies, and the best performing categories were lingerie, followed by womenswear. Our gross margin increased to 64.4%, and this is mainly due to favorable currency impact for the quarter.
Our comparable operating cost increased to EUR 69.2 million and were mainly impacted by the increase of volume-related operating cost and warehouse operating cost, including the transitional effects from the OCDC work stream. Our adjusted operating result was EUR -4.3 million, and this includes items affecting comparability that were related to the additional cost from the omnichannel distribution center for the quarter. We can then jump to the next page, where we'll go through the Stockmann division's financial performance. Here we're presenting the division's revenue and adjusted operating result. As earlier stated, the Stockmann division's revenue ended up at EUR 59.3 million and was on par with previous year.
The comparable revenue, excluding the impact of Itäkeskus department store, that was closed in June 2025, and the transfer of the furniture assortment to Stockmann's partner, Vepsäläinen, in September, grew compared to the comparison period. The digital sales were on par with previous year and accounted for 11.1% of total revenue. The division's main category, fashion, performed well, and its growth had a positive impact both on revenue and margin development. Stockmann's fashion sales developed in line with the overall fashion market, which recorded a clear growth in the division's home market. Stockmann's gross margin increased to 45.1% due to lower share of clearance sales and successful margin management. The adjusted operating result improved, mainly driven by successful cost efficiency measures, and this marked the eighth consecutive quarter for Stockmann's result improvement.
We can then turn to next slide, please. On this slide, we like to visualize the division-level changes and their impact on group's revenue, operating result during the first quarter. The left-hand side shows the changes in revenue, which ended up on an increase compared to the comparison period on group level. Lindex revenue increased by EUR 7.4 million, and this is due to strong commercial offering and effective clearance sales, while Stockmann's revenue decreased by EUR 0.4 million. The decline was due to Itis department store closure and the transfer of the furniture assortment. Looking into our adjusted operating result, it decreased to EUR 11.9 million on group level, and the key reason for this decrease were cost transition-related costs from the OCDC implementation work stream.
The Lindex division adjusted operating result decreased by EUR 4.1 million due to volume and warehouse-related costs. Stockmann division adjusted operating result improved by EUR 1.1 million due to successful efficiency measures and revenue growth in comparable terms. If we then go to the next slide and look into our group numbers, key figures for the quarter, and we can see that the revenue increased compared to the comparison period. In local currencies, the revenue increased by 0.8%, while the adjusted operating result decreased to EUR 11.9 million. The operating result ended up at EUR -13.1 million, and net result declined to EUR- 20.3 million. The net result was impacted by lower tax expenses and lower foreign exchange losses during the quarter.
The group's gross margin improved to 58.5% compared to 57.4% in the comparison period. Earnings per share decreased to EUR -0.12 , and this is mainly explained by the net result. If we then take the next slide and look at the profitability performance from a more historical context, we can clearly state that Lindex adjusted operating result has more than doubled compared to pre-pandemic levels, and even more if we look further back. We can see that the Stockmann Division has continued increasing its 12-month rolling adjusted operating result compared to previous quarters. The division has made significant improvements in profitability compared to 2020 or 2021. The year 2025 marked the first full- year positive adjusted operating result after many, many years.
If we then go to the next slide, here we would like to spend a few minutes reviewing our operating free cash flow development and capital expenditures. On the left-hand side, you can clearly see the Lindex Group's operating free cash flow, excluding the investment in the Lindex omnichannel distribution center. It came in at EUR -59.1 million, versus previous year, EUR 57.4 million. This is mainly driven by higher cost for capital expenditures for the quarter. Looking at the right-hand side, you can see the operating free cash flow on rolling twelve months. For Lindex division, it was EUR 77.1 million, and for Stockmann division, it was EUR -19.9 million.
What we also can see that both divisions improved compared to Q1 previous year, and this is due to improved net working capital situation. Looking into inventories for the quarter for the group, it ended up at EUR 186.4 million compared to EUR 202.6 million. For Lindex division, the inventories decreased partly due to successful clearance sales activities, whereas the Stockmann Division inventories were on par with the comparison period. In the first quarter, our capital expenditure ended up at EUR 7.8 million, compared to EUR 6.8 million previous year, and this consisted of investment related to digitalization projects, omnichannel development, and the omnichannel distribution center.
By the end of March, approximately EUR 104 million out of the total investment for the omnichannel distribution of EUR 110 has been settled. We can then jump to the next page, and here we will look into our cash position. This graph presents the changes in cash position per item from the beginning of the year to the end of March in relation to the comparison period previous year. At the end of March 2024, our cash and cash equivalents total EUR 71.6 million, compared to EUR 52.4 million previous year. The first quarter generated a total cash flow of EUR -63.2 million, compared to previous year EUR 62.2 million, and this is mainly due to seasonality in our business.
We can then go to the next page, and here we are. We would like to illustrate how the Lindex Group's financial position has developed during the last years, which has and of course will enable future growth. In this graph you can see that the net debt has remained on a good level. Excluding the IFRS 16 items, the interest-bearing net debt was negative at EUR 11.7 million. Equity ratio improved further and reached 65.5% excluding IFRS items and 32.4% including IFRS items. Our lease liabilities under the IFRS 16 reporting standard was EUR 601 million. Out of the EUR 601 million, EUR 301.9 million were related to the Lindex division, and EUR 299 million were related to the Stockmann division.
Our interest-bearing liabilities stood at EUR 83.4 million. During the reporting period, specifically in February, the Lindex Group signed a EUR 50 million revolving credit facility agreement, and this revolving credit facility matures in May 2027, and it's subject to a 15-month extension option. We also have a preexisting secured revolving credit facility of EUR 40 million, which will mature in July 2028. In total, the Group currently have secured unused credit revolving credit facilities up to EUR 90 million. Yes. Then last page regarding our financial situation. We can summarize Q1 by saying that we clearly can see improvements in the Group's performance during the first quarter, although the revenue increased.
We can also state that the Stockmann division marked eight consecutive quarters of result improvements and Stockmann's focused efforts on the division strategic priorities continued to strengthen competitiveness as operational and cost efficiency measures improve the profitability. With that, I would like to hand over to Susanne again, who will pave our way forward.
Thanks, Henrik. As Henrik said, looking at our way forward, starting with Lindex on the next page here, so I can see that very good. We work and we have established also a solid foundation to accelerate global growth efficiently while also continuing our transformation into a more sustainable business. At the same time, decoupling costs from growth by continuously improve the scalability and efficiency in our business. Taking a look at the next page, accelerating global brands and sustainable growth remains our top priority. Our focus is on scaling the Lindex brand internationally in a profitable and also responsible way, guided by our higher purpose and also long-term strategy. With our omnichannel distribution center now fully operational, we are well positioned to accelerate the benefits of this strategically important investment.
It enables higher efficiency, improved product availability, faster deliveries, and greater scalability as we continue to grow across markets and also channels. Expansion is a key enabler of our long-term ambitions, and we will continue to drive multi-channel growth by deepening our presence in existing markets while expanding into new ones. The market remains a priority market, with plans to open more stores in strategically important locations, both through additional own stores and through our partnership with Magasin du Nord. At the same time, we continue to further develop our e-commerce offering to better meet local customer needs. We will also continue to strengthen our digital and technical foundation by increasing automation across our operations and also progressing our AI journey. This will enable more efficient and also scalable ways of working while enhancing the customer experience and supporting continued growth.
Finally, we'll continue to advance our sustainability transformation, building on the achievements and learnings of recent years, and to further accelerate positive change in the fashion industry and create meaningful impact for women. We are now shaping our sustainability targets for 2030 across our operations with a continued focus on climate, circularity, and also human rights. Let's continue with Stockmann. Looking at the Stockmann division's strategy, our key target is to improve the financial sustainability and competitiveness of the division. The Stockmann division is strengthening its financial stability and competitiveness through four strategic must-win areas, which are to improve operational efficiency, differentiate through curated offering, grow and leverage loyal customer base, and optimizing omni-channel performance. Continuing on our next page, please. Stockmann continues to execute its strategy with a clear focus on profitability. We work systematically on cost control and operational efficiency.
Continued improvement of our operations and processes will support sustainable profitability over time. Growth and margin development are driven by strong commercial execution. We engage customers through well-timed campaigns, exclusive and new brand launches, and consistently high retail standards, both in stores and online. Seasonal inspiration and anniversary activities play an important role, such as the fortieth anniversary of one of our strongest own brands, Cap Horn. Looking ahead, we are well prepared for key spring and early summer occasions, including Mother's Day and graduation. Our assortment combines newness and timeless classics across fashion, beauty, home, food, and gifting. After the reporting period, we launched a new Stockmann app in April, followed by broader customer communication that will come now in May. The app brings shopping inspiration, loyalty into one seamless experience and is a key enabler of our strategy.
Native in-app shopping strengthens our digital channel and supports also omni-channel performance by creating a smoother customer journey. The app also reinforces the value of our loyalty program, which celebrates its fortieth anniversary this year. By leveraging customer insights more effectively, we can offer more relevant benefits, content and experiences strengthening long-term customer value. With that, we're happy to open up for questions from you, so we can take the next page. Perfect.
Thank you, Susanne and Henrik. We then kick off with the questions received from the audience, and we have actually got a couple of questions related to the omnichannel distribution center. I group them a little bit together, and I think that you will then be able to cover in your answer these questions. Can you provide some insight into the impact of the omnichannel distribution center on Lindex's first quarter performance and what implications we should expect for the coming quarters?
Yes. Thanks, Marja. During the quarter, as you heard, we completed the final phase of the transition to our new distribution center, including now also the e-commerce warehouse. This unfortunately resulted in a temporary negative impact on the digital revenue, as you heard, minus 10.5%, during this quarter in local currencies. We also had impact of higher operating costs related to the transition. The situation has gradually improved due to targeted actions, and by the end of April, our e-commerce operations have stabilized. The work to gradually reach full operation will of course continue during the first half of 2026, and we do look forward to realizing the full benefits of our new distribution center.
Thank you, Susanne. We have a question for Henrik. We have two questions related to the financing, and I think we can merge these again. The existing bond is maturing this summer, so what is your plan to handle the repayment?
Yes, that's right. The existing bond is maturing this summer, and we have planned for this bond maturity well ahead of time. With our current liquidity position, combined with access to financing, we are confident in our ability to manage the repayment. In parallel, we will continue to evaluate refinancing opportunities with the aim of securing the most sustainable and beneficial long-term financial structure for the group.
Thank you, Henrik. We have a question related to the costs, Lindex division and costs. Can you shed light on the increased costs of the Lindex division, and what different cost elements are included, and what were the underlying reasons for these increases?
During the quarter, the final transition of the Lindex division's e-commerce operations was carried out, and this transition had a temporary negative impact on the warehouse and e-commerce operations, including the distribution of the customer e-commerce orders. We can say that the comparable operating cost of the Lindex division was EUR 69 million, approximately EUR 3 million higher than previous year, and that was mainly impacted by the increases of volume-related operating costs and also warehouse operating costs. While volume-related costs might continue because we increased the volume during the quarter, the warehouse ramp-up effects linked to the transition phase are not expected to be permanent. Of course, Lindex continues to focus on cost efficiency and process automation to ensure efficient operations.
Thank you, Susanne. We stay with you, Susanne, here, and here is a question related to the operating environment. The question is, the EU has lowered growth forecasts with concerns related to the war in Middle East that could increase economic pressures. Is this impacting Lindex Group and if yes, how?
I would say yes. Broader global and of course European economic challenges, including lower growth forecasts, continue to create a demanding environment also for us. Intensified geopolitical risk are increasing the volatility in supply chains and also financial markets, which can lead to higher costs and also delays and creating planning uncertainty. At the same time, weaker consumer confidence driven by economic uncertainty may impact also the retail demand.
We stay in the Lindex division, and there is a question regarding the margins. Is there any meaningful margin difference between Lindex's digital and physical channels, growth or EBIT margin? Would you, Susanne, continue here?
Yes, I can try to answer that one. Of course, we are not sharing details here, but we can say that the gross margin is somewhat higher in our physical channels, primarily due to higher share of lingerie sales, which is naturally more bought in the physical channels, while the digital channel is also a little bit more markdown driven. That said, both channels do very strong EBIT margins and currently the digital channels have a slight EBIT margin advantage, which is expected to further improve with the benefits of our new distribution center.
Thank you. We still stay in the Lindex division and we have a question that relates to the market expansion in the Nordics. You mentioned that you aim to grow your presence in the Nordics. Does this imply that you disregard markets such as Baltics or Eastern Central Europe, or are these markets still considered?
Well, I hope I didn't say we were disregarding those markets, but what I tried to emphasize is that Denmark is a new market for Lindex, where we aim to increase our physical presence. Looking at the Baltics and Central Europe, here we have more than 70 stores already in these markets. But of course, when the right location is found, it could be also interesting to add new stores there. Are you still with us, Marja-Leena Dahlskog?
Now. Sorry, I was muted.
No worries.
We have a question related to dividends. During this year, when are you able to get rid of the factors according to which Lindex Group is not able to pay dividend, even if, financially that would be, okay?
I guess that's a question for me, right, Marja?
Yes, that would be.
Yes. Under the existing or current terms of the bond that is maturing now in July 2026, dividend payment, they are restricted. Thereafter, there is no comparable limitation in place.
Thank you, Henrik. We have then a question related to the Stockmann division and Stockmann's inventory. This would be for you, Henrik, probably. Related to the Stockmann division, you have divested one department store and the furniture business since last year, but the inventory level is now even higher than last year. Does the Stockmann division have inventory issues? Is there old or slow-moving stock? One would have hoped to see a decreasing inventory level. How would you comment this, Henrik?
The Stockmann division's inventories remained on previous year's level, which we consider is a very healthy level for the company, supporting both good revenue development and gross margin development. It's true there has been reduction due to having one store less and divesting the furniture business, but in the same time, inventory has increased due to business model changes to wholesale for one of our main brands.
Thank you, Henrik. We have a question related to the new omni-channel warehouse and the savings potential. In the report, you state that the new omni-channel warehouse will bring EUR 10 million EBITDA savings from 2026. Should the full run rate be visible in H2? Would you, Henrik, comment that one?
Yes, would be happy to. From 2026 and onwards, the new center is expected to generate EUR 10 million in annualized savings on EBITDA level. We're now gradually moving towards to stabilize the warehouse operation and increasing the capacity step by step. Now, at the end of April, we see stabilized e-com operations, and we estimate that this phase to continue during Q2 and work to gradually reach the full operations will continue during the first half of 2026. Once completed, it will allow Lindex to realize its full benefits of this important facility supporting the vision's growth plans going forward, along with the efficiency improvements and the savings.
Thank you, Henrik. These were actually the questions that we have received from the audience today. Thank you for very, very good relevant questions. Thank you on my behalf.
Thank you, Marja. I say as also Marja said, thank you for your good questions. Please be in touch with our Investor Relations via email if you would like to reach out to us. Otherwise, we will publish our half year result on the seventh of July. See you in July the latest. By that, we would like to say thank you and wish you a nice day.
Thank you.
Thank you.