Lindex Group’s Financial Statements Bulletin 2024, published on 7 February 2025:

Lindex Group operates in a dynamic and complex environment that exposes the company to a range of risks that may affect its financial performance, operations, and reputation. These risks arise from macroeconomic factors, seasonal variations, complex supply chains, information security threats, and increasing sustainability risks, among others. Below is an overview of the key risks and uncertainties affecting the Group.

Macroeconomic situation
Inflation and interest rate levels may continue to pose challenges for the Lindex Group despite the levels decreasing throughout the year 2024. Inflation-related cost increases impact the Group’s operational expenses while also constraining customers’ purchasing power. These pressures may continue to impact customer behaviour and shift demand between different product categories. Additionally, macroeconomic uncertainties may affect asset valuations, and interest rate fluctuations may impact the discount rates used in impairment testing.

Exchange rates
Lindex Group’s revenue, earnings, and balance sheet are influenced by changes in exchange rates, particularly between the euro (the Group’s reporting currency) and other key currencies, such as the Swedish krona, Norwegian krone, and the U.S. dollar. Since the Group’s operations span multiple countries, currency fluctuations may affect its financial performance. Due to the ongoing corporate restructuring, the Group’s ability to fully hedge against transactional currency risks is currently limited, leaving it exposed to potential currency volatility.

Seasonality
Seasonal variations are an inherent characteristic of the retail industry and significantly impact Lindex Group’s revenue and profitability. Typically, revenue is lower in the first quarter, while the second and fourth quarters experience higher sales activity. Fashion, which accounts for approximately 80% of the Group’s revenue, is particularly sensitive to seasonal trends and weather conditions. Additionally, the timing of the Stockmann division’s ”Crazy Days” campaign has a significant impact on quarterly revenue and operating results, as the campaign drives a surge in consumer activity during the period it is held.

Supply chain and logistics
The global value chain in the retail sector is inherently complex, involving multiple stages from sourcing to final delivery. Lindex Group faces risks related to labour rights, environmental standards, and ethical business practices. Unexpected disruptions in the supply chain, such as delays in shipments or production stoppages, may increase operational costs. Given the Group’s reliance on a global supply network, unexpected logistics issues could lead to higher freight costs and longer lead times, potentially affecting inventory availability and customer satisfaction. The Group is receiving market signals of possibly increasing protectionism and potentially rising trade barriers, which may present additional challenges for the global supply chain and logistics operations.

Sustainability risks
Sustainability-related risks have become increasingly significant for Lindex Group, with climate change specifically identified as an economic risk for the company. These risks concern the Group’s ability to manage environmental impacts and adapt to changing regulations and expectations regarding sustainability efforts and reporting.

Information and cybersecurity
As professional cybercrime becomes increasingly sophisticated, there is an elevated risk of cyberattacks targeting Lindex Group’s information systems. Such attacks could disrupt business continuity, compromise customer and employee data privacy, and damage the Group’s reputation. Protection against cyber threats requires continuous investment in robust information security measures and proactive risk management.

Employee turnover and retention risk
The risk of losing key personnel has been identified and included as a critical component of the employee turnover risk. Ensuring that key personnel remain within the organization is vital for maintaining operational continuity and successfully implementing strategic initiatives.

Restructuring programme
The restructuring programme of the Group is progressing. The sale of all department store properties has been completed, and interest-bearing debt has been reduced, leaving only a EUR 73.1 million bond remaining. One unresolved claim related to a terminated lease agreement remains as a risk that must be addressed before the restructuring process can be concluded. Successfully resolving this claim is crucial for completing the restructuring process. The ongoing restructuring programme may have an impact on the near-term refinancing.

Risk management in the lindex Group

The goal of risk management is to secure the Group’s earnings development and to ensure that the company operates without any disturbances by controlling risks in a cost efficient and systematic manner in all divisions.

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