Good morning, everyone, and welcome to Lindex Group's Q3 webcast. I am Susanne Ehnbåge, CEO of Lindex Group. Today, we will talk you through the key highlights of our financial performance for July to September 2026. Let's begin with the agenda. We will start with the operating environment and the key highlights of the quarter. We will then cover the business development in Lindex and Stockmann, followed by a more detailed financial review. We will then conclude with our priorities going forward and then open the line for questions. Next page, please. Let's begin with a business update for the group and also our two divisions. Here, we will take a look at the consumer confidence here in our key markets. As you can see, the consumer confidence remained weak and varied across our Nordic markets in the third quarter.
Sweden improved and moved slightly above the long-term average in September. Finland improved during the summer but weakened again in September, while the sentiment in Norway remained clearly negative and also declined further. Overall, the outlook remains uncertain, despite somewhat better expectations for economic and consumption growth. Let's now turn to the key messages from the quarter. Overall, Lindex Group delivered a positive third quarter with broad-based revenue growth, stronger profitability for both divisions, and improved cash generation. The adjusted operating result increased by 45% to EUR 24.1 million and adjusted operating margin reached 10%. The group's gross margin improved to 60.1% from previous year, 58%. The gross margin improved for both divisions and especially for the Lindex division. After the first nine months, the group's financial position has strengthened, with cash and cash equivalents exceeding interest-bearing debt.
Based on our performance to date and the outlook for the remainder of the year, we have specified our guidance for the adjusted operating result to EUR 75 million-EUR 90 million, and the strategic assessment continues. If we move on to the group's Q3 result, we delivered, as said, a strong third quarter. The revenue increased by 6.1% to EUR 241.5 million or by 5.6% in local currencies. Lindex division's revenue increased by 3.7% or 3% in local currencies, with growth across all product categories. Stockmann's revenue increased by 12.3%, with growth in every month of the quarter. The first day of the Crazy Days campaign fell within the reporting period. The group's adjusted operating result increased by EUR 7.5 million. Lindex division contributed with EUR 4 million, driven mainly by improved gross profit, and Stockmann contributed with EUR 3.6 million, mainly supported by higher revenue.
If we then move on to the Lindex division. Lindex delivered a positive quarter with revenue growth across all categories and also supported by a strong womenswear offering and higher store sales. The digital revenue returned to growth in the third quarter, increasing by 2.4% in local currencies despite continued availability constraints. We also accelerated improvements to the online customer experience, including search and navigation. The omnichannel distribution center is a key enabler for future growth, and our priority is to optimize operations and processes and improve the productivity and service and realize the long-term efficiency and cost benefits of the new setup. We continue to grow our active customer base and expand our Nordic presence. Last week, we opened our third store in Denmark in Aarhus, and we plan to open a fourth store at Field's in Copenhagen in the first half of 2027.
Finally, we continued our long-standing support for cancer research and breast health awareness through the Pink Umbrella and the Walk for Pink initiatives, closely linked to our higher purpose and to drive a meaningful change for women. With that, we can move over to Stockmann. Stockmann continued its positive development with a broad-based revenue growth and supporting a further improvement in earnings. Revenue increased every month and across all channels. The focus on newness, own brands, and curating offering resonated well with the customers, and fashion performed particularly strongly. The first day of the Crazy Days was included in the quarter, while the full campaign held mainly after the reporting period and it performed in line with the previous year. Stockmann also strengthened customer engagement. Both active and new loyal customers increased while the Stockmann app continued to gain traction.
At the Helsinki flagship, we initiated a strategic transformation to strengthen the luxury offering and renew the women's accessories departments across two floors. Overall, the quarter demonstrates how a more distinctive offering, stronger omnichannel capabilities, and our deeper customer relationships support sustainable and profitable growth. Let's look at our guidance. Based on our performance to date and our current outlook for the remainder of the year, we have specified our guidance for 2026. In 2026, Lindex Group expects its revenue to grow in local currencies compared to 2025. The group's adjusted operating result is estimated to be between EUR 75 million-EUR 90 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 for a financial update.
Thank you, Susanne. Let's now look more closely into the third quarter. Looking into, we start with Lindex division, and here the revenue increased by 3.7% and ended up at EUR 171.5 million. In local currencies, the revenue increased by approximately 3%. As earlier said by Susanne, the positive revenue development came from all categories within the division. The revenue from our physical stores increased by 3.2% in local currencies, and our digital sales also grew in local currencies. Our digital revenue accounted for approximately 21% of total revenue. The gross margin increased to 65.8% compared to 62.7% previous period, and this is due to favorable currency effects and a stronger underlying margin position. Our comparable operating costs were at EUR 66.9 million, and the increase here is mainly related to higher sales volume and general cost increases.
Lindex continues to focus on cost efficiency and process automation. Looking into our adjusted operating result for the quarter, it increased to EUR 24.2 million compared to EUR 20.2 million previous year, and this is driven by improved gross profit while our operating cost remained controlled. We can now switch page and look into how Stockmann performed in Q3. For this division, our revenue came in at EUR 70.1 million, and it is a strong increase by 12.3%. It was supported by first day of the Crazy Days campaign, which fell within the reporting period. However, we can state that the revenue growth was recorded in each month of the quarter, and it is reflecting successful commercial actions and strengthened customer demand. Our digital sales increased by 15.7% compared to previous year and accounted for 9.5% of our total revenue.
Stockmann's gross margin increased to 46% compared to 45.5% previous year, and this is driven by improved sales margin as well as effective campaign and margin management. The adjusted operating result continued to improve and ended in the quarter on EUR +1 million compared to EUR -2.6 million previous year. The division-focused efforts on its strategic priorities continued throughout the quarter, and it is about strengthening competitiveness, contributing to the revenue growth, and improved profitability, as well as enhanced operational efficiency. Let's turn page, please. On this slide, we are trying to visualize how the division level changes is impacting the group's revenue and our adjusted operating result during the third quarter. On the left-hand side, we can see the revenue, which increased compared to the comparison period on group level.
As earlier said, Lindex contributed with an increase by EUR 6.1 million, with growth from all categories, and Stockmann contributed with EUR 7.7 million, and the increase can be seen for every month during the quarter. The increase was, once again, supported by the first day of Crazy Days campaign, which fell within the reporting period. Looking on the right-hand side, here we are visualizing how the adjusted operating result is impacting the group level. Here, Lindex division contributed with an increase of EUR 4 million, and this is mainly due to improved gross profit while we have had operating costs under control. Stockmann contributed with EUR 3.6 million. This is gross profit improvement and successful efficiency measures that contributed to the positive development. If we then go to next page, this is a summary of the group key figures for the quarter.
I think we have talked about the revenue and adjusted operating results, so I will jump right into our operating result. The operating result ended up at EUR 25.6 million, and our net result increased to EUR 12.1 million during the quarter. Our group margin came in at 60.1% compared to 58% previous year. Earnings per share increased to EUR 0.07 per share. We can then move to the next page. Here we're trying to visualize the division impact on the group's result for the first nine months of 2026. The group revenue increased by 3.9% and ended up at EUR 693 million. Here, both divisions contributing to the growth. We can also say that consumer remained cautious and the fashion market conditions were volatile throughout the year, particularly in the beginning, and this has affected sales in both divisions.
Lindex specifically faced also temporary impacts from the transition and the optimization phases of the new omnichannel distribution center in previous quarters. Looking at end of September, Lindex has contributed by EUR 20.8 million in additional revenue, supported by strong customer offering and effective sales activities, and Stockmann contributed by EUR 5.5 million. Worth to mention here is, of course, the closure of Itis and the transfer of our furniture business to Vepsäläinen in 2025 affected the comparison to previous year on a nine-month perspective. Going into the right-hand side, we have the operating profit. It rose to EUR 42.6 million, up EUR 12.5 million compared to previous year, and both divisions improved gross profit and kept costs under control. Overall, the first nine months of 2026, both divisions contributed to higher revenue and improved profitability.
If we then turn to the next page, here we're trying to illustrate how the profitability has developed for both divisions over time. As you can see, earnings have improved significantly over the past years. Lindex division continues to deliver profitability at a clearly higher level than before the pandemic, reflecting the strength of the customer offering, our disciplined execution, and a consistent focus on profitable growth.
Looking at Stockmann division, they have delivered a sustained turnaround, and since Q3 2023, adjusted operating result has improved from a loss of EUR -12 million to a profit of EUR 7 million and representing an earnings improvement of approximately EUR 19 million. After reporting its first full-year positive adjusted operating result in 2025, following many years of losses, Stockmann has continued to strengthen profitability in 2026, and the rolling 12-month adjusted operating result is now at its highest level in recent years.
I think overall, the chart demonstrates the significant earnings improvements achieved across both divisions and the progress made to strengthen the group's profitability. With that, let's move on to the next page, where we would like to spend a few minutes reviewing our cash flow development and capital expenditures. After the first nine months of the year, the group financial position has improved from the comparison period, with cash and cash equivalents exceeding interest-bearing debt. On the left-hand side of there, you can see that Lindex Group's operating free cash flow, excluding the investment in the omnichannel distribution center, was at EUR -11.3 million, an increase compared to previous year, where it was EUR -35.5 million, and this is driven by strong operational performance. Looking specifically at our inventories, they ended up at EUR 187.8 million compared to previous year, EUR 193.9 million.
Lindex division decreased the inventories to EUR 112.4 million, reflecting effective inventory management. Stockmann inventories at the end of the quarter were above comparison period at EUR 75.4 million compared to EUR 72.1 million. This is due to a business model change for one of the key brands and partly by planned increase in seasonal intake to support our strategy execution. In the third quarter, our capital expenditure ended up at EUR 6.2 million, which consisted of investment related to digitalization projects, omnichannel development, and the omnichannel distribution center. By the end of September, approximately EUR 105 million out of the EUR 110 million, as we have as investment for the omnichannel center, has been paid. Looking into the right-hand side, you can see the operating free cash flow on a rolling 12-month scale. For the Lindex division, it ended up at EUR 99.7 million.
For Stockmann division, it ended up at EUR -16 million. We can then turn page, and here we can see the development in our cash position since beginning of the year compared to previous year. At the end of September 2026, cash and equivalent ended up at EUR 80.6 million compared to EUR 53.6 million in the comparison period. In the third quarter, we generated a total cash flow of EUR -23.2 million compared to EUR -31.4 million previous year. Just a small highlight here, the movements in the loans here or the swings in the loan in the table is due to refinancing of the external debt that was carried out during the period. We can then go to next page, where we're trying to illustrate how the financial position has improved during the latest year, which has and will enable our future growth.
In the graph here, you can see that the net debt has remained on a good level. Excluding IFRS 16 items, the interest-bearing net debt was positive at EUR 30.6 million. Our equity ratio improved further and reached 67.4%, excluding IFRS item, and 34.1% including IFRS item. The lease liabilities under IFRS 16 reporting standard ended up at EUR 577.1 million, a small drop compared to previous year. Here we can see that the lease liabilities related to the Lindex division ended up at EUR 291.5 million, compared to EUR 267.9 million previous year. The Stockmann division, the lease liabilities ended up at EUR 285.7 million compared to EUR 311.7 million previous year. Our interest-bearing liabilities stood at EUR 50 million and in July 2026, Lindex Group repaid its maturing senior secured bond, worth EUR 73.1 million.
As a summary, we can then just to financial highlights, for Q3, and we can say that we saw good progress in the group's performance during the third quarter. The positive development for the Lindex division was driven by improved gross profit while operating costs remain controlled. Stockmann's efforts in the division strategic priorities continued to strengthen the competitiveness and the gross profit improvements together with operational cost efficiency that helped improve the profitability. With that, I hand over to Susanne who will pave the way forward.
Thank you, Henrik. As Henrik said, let's turn to our priorities going forward, starting with Lindex. Lindex has a clear strategy for value creation built on our three priorities that you have seen before. Accelerating growth, transforming towards a more sustainable business, and also improving scalability so that the costs become less dependent on growth. If we move to the next page, please. We have a strong, loyal, and active customer base, which we will continue to expand through targeted investments and also collaborations. Key here is to have an attractive offering for our existing and also new customers. Some examples of coming activities are, for our younger women, we see opportunities to strengthen our lifestyle proposition through concepts such as Holly & Whyte that we have within womenswear, and also to expand our loungewear offering.
In lingerie, we are focusing not only on innovation, but also making the category easier to shop through stronger guidance, clearer communication, and also improved presentation. Female Engineering demonstrates how customer insights can be translated into new growth opportunities by addressing specific customer needs and also expanding into additional life stages and occasions. Within our channels, we continue to expand our partnerships with carefully selected partners that allows us to grow internationally in a capital-efficient way. Further expansion in Denmark, as I mentioned earlier, that we will now open our fourth store in Copenhagen during the first half in 2027. Although we have entered an optimization phase of the omnichannel distribution center, we are still focused on realizing the long-term efficiency, cost savings, and growth benefits that this distribution channel enables.
We have begun to realize efficiency gains from the new setup and expect these benefits to increase gradually as operations continue to mature and also optimize. The new omnichannel distribution center is also central for digital growth as it creates a strong platform for profitable digital growth in the years ahead. Finally, growth must be accompanied by financial discipline, and we continue to invest in the business where we remain focused on strong profitability, cash generation, and also capital efficiency through disciplined cost management and also healthy inventory levels and the flexibility to adapt to changing market conditions. At the same time, we continue to build a more scalable and efficient operating model by simplifying ways of working, increasing the use of digital tools and automation, and adapting our organization where needed. These actions help create capacity for future growth while reducing the link between cost and growth.
Let's continue on the next page, please. Stockmann's strategy is focused on strengthening profitability and competitiveness through four must-win areas. Improving operational efficiency, differentiating through a curated offering, growing and leveraging the loyal customer base, and optimizing the omnichannel performance. Let's take a look at the next page, please. Stockmann enters the final month of the year from a stronger position, and we will continue to execute our strategic priorities with a clear focus on competitiveness and also profitable growth.
First, we will maintain cost discipline and improve operational efficiency. The aim is to support growth without a corresponding increase in the cost base while creating capacity to invest in other priorities. Second, we will strengthen differentiation through our curated offering, combining inspiring partner brands and new concepts and commercially successful own brands. We are also progressing with the transformation of the Helsinki flagship and the new luxury hall.
Additional international luxury brands will join the portfolio as the project advances through the remainder of 2026 and into 2027. We really look forward to sharing more information about these brands and the next phase of the luxury hall soon. Finally, the festive season is an important part of Stockmann's DNA, and we are entering the season with a curated gifting offer, experiences, and also inspiration across stores and digital channels, together with a tailored benefit for MyStockmann members. By that, we will now open up the line for questions.
Thank you very much, Susanne. Welcome to the Q&A session. My name is Anna Appelqvist, and I recently joined the Lindex Group, responsible for communication and investor relations. Today I will be moderating the questions that you submit to Henrik and to Susanne. The first question that we have received here, Susanne, is for you. "Was the group's profitability improvements in Q3 mainly due to a weak comparison quarter in 2025?"
No. While Q3 2025 was affected by temporary product availability challenges related to the ramp-up of our new omnichannel distribution center, the improvement in Q3 2026 goes well beyond lapping a softer comparison quarter. Compared to Q3 2024, the revenue is up by almost 9%, so it is 9% higher than two years back, and adjusted operating result is more than 50% higher. I would say that this reflects both stronger sales, a stronger gross margin in both division, and also a continued cost discipline, demonstrating a clear improvement in the group's underlying performance and also profitability.
Thank you very much. We have received two questions here on the Crazy Days timing, Susanne, so I will refer that to you. "We have mentioned the impact from the Crazy Days campaign several times, but how much of the revenue improvements came from the Crazy Days campaign in Q3? Does this mean also that we then should expect a negative revenue impact for Stockmann in Q4 2026?"
Regarding the Crazy Days, we don't disclose the specific impact of that campaign. What we can say and share is that both revenue growth and the profitability improved throughout the quarter. We had a positive development in each month, and the timing of the Crazy Days means that some of the sales were recognized in Q3 this year rather than in Q4, which will, of course, affect the quarterly comparison. However, most of the improvement in revenue and profitability was delivered during the quarter before the campaign started. The timing difference affects the comparison between the quarters, but it does not affect underlying business performance or full-year sales.
Thank you. Henrik, we have a question here on gross margin, so I will turn that to you. "The gross margin was strong in Q3, reaching 60.1% for the group and 65.8% in the Lindex division. How sustainable are these levels? Should we expect some normalization in Q4 and going into 2027?"
A very valid question, I would say. I would like to start by saying that we are very pleased with the gross margin development in Q3. FX was an important contributor to this outcome, but it was not the only driver here. We are also noting a stronger underlying margin position, and this is reflecting improvements in areas such as our sourcing tactics or strategy, as well our commercial execution during the quarter. Naturally, gross margin can vary between quarters depending on factors such as FX, sales mix, promotional activity, and we don't provide specific margin guidance going forward.
Good. O ver to you, Susanne, again. We have a question here on e-commerce. "It improved in Q3 following a negative revenue development during the first six months of the year. How do you expect e-commerce in the Lindex division to develop in Q4?"
Yes, we saw an improvement in the e-commerce during the third quarter, supported by improved product availability in the new omnichannel distribution center. O f course, we continue to address the remaining availability and allocation challenges related to the omnichannel distribution center, but it's moving forward in the right direction. While there's still further improvement potential, we expect the progress made to provide better support for our digital business going forward. A s usual, we don't provide guidance for individual channels or quarters.
Very good. Henrik, we have a currency question here, so I will refer that to you. "Given the Swedish and the Norwegian krones weakness over the past six months, how do you expect it to affect the coming quarters, both translation on reported revenue and the transaction gross margin impact as your, or our, U.S. dollar hedges roll off?"
Yes. A weaker Swedish and Norwegian krones is revenue through the positive translation effects that we're talking about here. This is, of course, particularly from our Norwegian operations. U.S. dollar hedges, as also mentioned here, as they roll off, we do expect some pressure on gross margin from impacting a higher sourcing cost. Although this is partly mitigated through our hedging strategy and also commercial actions. I would say that overall, the translation effect is positive for the revenue, while the transaction effect is more mixed and that primarily affects the margin.
Thank you. Then we have a couple of questions here, so let's divide them a bit here. Susanne, I will turn this question to you. "Can you give us some indications on the Denmark store launches in Lindex? We already touched a little bit on it in the presentation, but perhaps you can give some more flavor to it."
Yes. Overall, we are excited about Denmark, and we see a strong potential for Lindex and our Scandinavian offering in that market. We believe Denmark is an important part of strengthening our Nordic position. We have now opened a couple of stores where we have seen good progress, and that is also the reasoning for us now adding a fourth store that then will be opening here in spring 2027. Before entering with this store opening, we have also done our job, I would say, with both entering collaborations that we have had with both physical and digital presence, including our own e-com.
This is our way moving into a new market. We believe the physical stores are an important part of building the brand and customer relationships alongside our digital presence. We are encouraged by the opportunity we see, and will continue to develop our presence in Denmark in a disciplined way.
Very good. Henrik, back to you again regarding the financial position. "Is repaying debt preferred to, that is, then dividends or other instruments? Have you excluded the possibility to raising new debt? Do you see any better use of cash, such as investment? Maybe elaborate on the financial position you target at large, please." A lot of comments, a lot of questions in one question.
Yep, I hear. I would like to start by saying that we are happy with the improvements that we have seen during the last quarter when it comes to our financial positions. When it comes to potential dividends, etc, those consideration is part of board of directors' normal governance process. Of course, they are reviewing the group's financial position and the strategic priorities. The board proposal is something will be communicated ahead of the AGM meeting 2027. I will leave that question out, and instead just saying that we are focusing on improving our financial positions. We have made some good segues, and we will continue to have it as a priority for us going forward.
We also have a question here on availability constraints, and I will refer this to you, Susanne, if okay. "How was the availability constraints in online towards the end of the quarter? Is it normalizing?"
Yes.
Refer to the e-com.
Yes, I understand. Yes, it has improved as you could see, thinking about how it was in the first six months when we had a negative development, unfortunately, on the digital channel, and now it is positive. We have seen a gradual improvement within that area, but there is still work to do to improve it further.
Thank you. Then finally, we have one question here on the omnichannel distribution center, and I will address this to you, Henrik. "Is the approximately EUR 10 million annual net OpEx savings still the target and base case with full effect from 2027?"
First of all, I think we'd like to start by saying that the project itself goes according to plan, and we're starting to see effects of the optimization phase. We expect that from 2026 and onwards, we are expected to generate. Sorry, let me come back here. From 2027 onwards, we expect the omnichannel distribution center to generate EUR 10 million EBITDA levels savings compared to the business case that we had when this was announced. W e're following that plan, I would say.
Very good. Up until now, we have not received any further questions, so I think we can close the call for today. Should there be any other questions that any one of you online come up with after the meeting, please do contact us and we will do our very best to answer them as well. H ang on, we had one question coming in just the minute I saw it. Let's see here. "Several Swedish fashion competitors to Lindex have shifted from being loss-making profitable over the last three to four years. Are you seeing less aggressive promotional and marketing pressure in the market? Do you see this as an opportunity to regain some market share in Sweden?" Susanne, do you have any comment on this?
Yeah, I can try to comment that. I wouldn't say that we have seen a less aggressive promotional and marketing pressure. I would say that it probably is around the same it has been over the last couple of years, and maybe it's even to some extent more intense in certain periods of time. I wouldn't say that, but I believe that all of us are working on what we can improve, and that still the promotional activities is something that is very much used looking at our competitors. I would n't say that the promotional activities have decreased over the last couple of years.
Very good. Okay. Then I'll say again, with that, we close the session for today. Should there be any more questions, please let us know and write to us or contact us, and we will do our very best to answer it. Thank you all for joining in today.
Thank you, Anna, for asking and supporting us with the questions. As also Anna said, if anything comes up later, you can always contact our investor relations team. We will publish our Q4 and full-year results on February 4th, 2027. Thank you from me and Henrik.
Thank you.
Bye-bye.