Lindex Oyj : Interim Report Q1/2024

Q1

2024

Guidance for 2024 (unchanged):

In 2024, Lindex Group expects its revenue to increase by 1-3% in local currencies compared to 2023. The Group's adjusted operating result is estimated to be EUR 70-90 million. Foreign exchange rate fluctuations may have

a significant effect on the adjusted operating result.

Market outlook for 2024:

The market environment in 2024 is expected to remain challenging. The macroeconomic situation in Europe remains uncertain due to the continuing geopolitical instability. High interest rates and inflation are holding back economic growth, and the retail sector may be affected by lower consumer demand. Forecasts are indicating a stagnant GDP (Gross Domestic Product) development or slow growth in the company's key markets. Inflation is forecasted to continue declining from high to targeted levels. The situation may vary between the Group's markets. Disruptions in supply chains and international logistics during the year cannot be excluded either.

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STRATEGY

Lindex Group's two divisions, Lindex and Stockmann, have their own strategies targeting sustainable and profitable growth. The Lindex division's strategy builds on Lindex's purpose of empowering and inspiring women everywhere. The division's three strategic must-win areas are to accelerate growth, transform into a sustainable business, and decouple cost from growth.

The Stockmann division's customer-centric strategy builds on Stockmann's purpose of being a marketplace for a good life. The division's three strategic must-win areas are to elevate offering, grow and leverage the loyal customer base, and ensure a seamless omnichannel experience. Additionally, the Group has a clear focus on operational efficiency.

Both divisions are committed to Lindex Group's science-based climate target to reduce greenhouse gas emissions from its own operations and its value chain by 42% by 2030 compared to 2022. Lindex Group expects the Science Based Targets initiative (SBTi) to validate its climate target during 2024.

In September 2023, Lindex Group initiated a strategic assessment aiming to crystallise shareholder value by refocusing the Group's business on Lindex. As part of the assessment, the Group changed its parent company name from Stockmann plc to Lindex Group plc, as decided by the Annual General Meeting on 21 March 2024. The Group continues to investigate strategic alternatives for the Stockmann department stores business. Lindex Group expects the strategic assessment to be finalised during 2024 and will provide an update on the assessment if, and when, appropriate.

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REVENUE AND EARNINGS, LINDEX GROUP

January-March 2024

Lindex Group's revenue for the first quarter decreased to EUR

192.8 (198.5) million. In local currencies, the revenue declined by 3.2%. The Lindex division's revenue increased by 3.3%, and by 2.7% in local currencies, with sales growth in all main markets. The Stockmann division's revenue decreased by 13.6% mainly due to the timing of the Crazy Days campaign.

Lindex Group's gross profit decreased to EUR 108.5 (112.0) million. The Lindex division's gross profit was at the comparison period level, while in the Stockmann division it declined significantly due to lower revenue, mainly resulting from

the timing of the Crazy Days campaign.

The Group's gross margin remained at the comparison period level at 56.3% (56.4). The Lindex division's gross margin decreased clearly explained by higher freight costs due to unexpected logistic challenges in the Red Sea and negative currency impact. The Stockmann division strengthened its gross margin clearly due to improved inventory management.

The comparable operating costs increased to EUR 89.6 (88.8) million. Inflation increased costs, along with expenses for strategic investments in digitalisation and future growth. However, both divisions implemented cost-saving measures to partially mitigate the impact. Lindex Group continues to invest in automation and digital solutions, which will further improve cost-efficiency.

The Group's adjusted operating result declined to EUR -6.5(-2.4) million, due to the timing of the Stockmann division's Crazy Days campaign and increased freight costs in the Lindex division.

Excluding these negative impacts, the underlying business developed positively. The currency rates didn't have any material impact on the Group's adjusted operating result. The operating result declined to EUR -7.6(-2.9) million.

FINANCING AND CASH FLOW

Cash and cash equivalents totalled EUR 83.7 (102.5) million at the end of March, and EUR 137.5 (167.9) million at the beginning of the quarter.

Lindex Group's operating free cash flow excluding the investment in the Lindex omnichannel distribution centre was EUR -39.2

(-40.5) million. The Group's business is affected by normal seasonal fluctuations during the year and the cash flow in the first quarter is typically low due to higher net working capital compared to the beginning of the year. Investments affected the quarter's cash flow by EUR 6.7 (13.5) million.

At the end of March, total inventories were EUR 179.7 (186.2) million. The Lindex division's inventories decreased clearly, due to good inventory management, which mitigated the impact of more goods in transit due to the global freight situation. The Stockmann division's inventories remained at the comparison period level despite the fact that the Crazy Days campaign started at the beginning of April while the year before Crazy Days started already in March. The Crazy Days campaign typically increases inventories temporarily.

At the end of March, the Group had the interest-bearing liability of a non-current senior secured bond of EUR 73.1 (67.5) million. The increase in the bond liability is explained by some creditors choosing the bond as a payment for undisputed restructuring debts. The lease liabilities under the IFRS 16 reporting standard totalled EUR 603.2 (574.0) million, where the lease liabilities related to the Lindex division were EUR 272.8 (280.9) million. In the Stockmann division, the lease liabilities increased to EUR

330.4 (293.1) million due to prolonged lease agreements for some department stores. Excluding the IFRS 16 items, the interest- bearing net debt was positive at EUR 10.6 (35.7) million.

The equity ratio was 28.2% (27.9) and net gearing 164.4% (154.3) at the end of March. IFRS 16 items had a significant impact on the equity ratio and net gearing. Excluding the IFRS 16 items, the equity ratio was 60.5% (58.7) and net gearing was -2.2%(-7.7).

The Group's capital employed at the end of March was EUR

1 036.8 (990.3) million and EUR 553.3 (532.1) million excluding the IFRS 16 items.

CAPITAL EXPENDITURE

In the first quarter, capital expenditure totalled EUR 6.8 (13.6) million and it was mainly used for digitalisation projects and omnichannel development in both divisions. The comparison period included higher investments for the Lindex omnichannel distribution centre. The Lindex division is driving digitalisation in its store network with a digital store programme, which includes implementing a new mobile POS (Point of Sales) system and integrating RFID technology to improve process efficiency and elevate the customer experience. The Stockmann division also continued RFID implementation to enhance efficiency and stock accuracy.

The Lindex division's largest-ever investment, a new omnichannel distribution centre, proceeded as planned. It will be an important enabler for continued growth and improved efficiency. The investment amounts to approximately EUR 110 million between 2022 and 2025. By the first quarter of 2024, EUR 83 million of the total investment sum had been used for the project.

REVENUE AND EARNINGS BY DIVISION

Lindex Group's reporting segments are the Lindex and Stockmann divisions. The segments are reported in accordance with IFRS 8. Unallocated items include Corporate Management, Group Finance Management, Group Treasury, Internal Audit and Investor Relations.

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REVENUE BY MARKET

1-3/2024

REVENUE BY CHANNEL

1-3/2024

January-March 2024

The Lindex division's revenue increased to EUR 130.6 (126.5) million and grew by 3.3%. In local currencies, the revenue increased by 2.7%, with stores showing a growth of 1.8% and digital channels showing an increase of 8.9%. In the review period, digital sales accounted for 22.9% (21.6) of Lindex's sales.

Despite the continued challenging market conditions, Lindex increased sales across all main markets through both stores and digital channels. The best-performing category during the quarter was womenswear. Customers' average purchase increased, and the number of active and new customers continued to grow. During the quarter, Lindex continued to expand its market presence with partnerships.

The gross profit was at the comparison period level and totalled EUR 82.0 (82.3) million. The gross margin declined to 62.7% (65.1), mainly as a consequence of higher freight costs due to unexpected logistic challenges in the Red Sea and negative currency impact.

The comparable operating costs increased to EUR 60.1 (58.2) million due to inflation and higher costs related to the strategic investments in digitalisation for enabling growth. Lindex continued to focus on cost-efficiency and process automation to mitigate cost inflation.

The Lindex division's adjusted operating result decreased to EUR

4.2 (5.6) million. Increased revenue affected the result positively, but the higher freight and other operating costs had a negative impact on it. Excluding the negative impact of the increased freight costs, the adjusted operating result developed positively. The operating result for Lindex was EUR 7.6 (5.6) million, which was positively impacted by an insurance settlement during

the quarter.

Capital expenditure was EUR 5.6 (11.5) million, which was mostly related to the digital store programme, omnichannel projects and the ongoing construction of the new omnichannel distribution centre. The comparison period included higher investments for the Lindex omnichannel distribution centre The investment is proceeding according to plan and the new centre will be taken into operation in 2024.

At the end of March, Lindex had 441 stores in total, of which 405 are own stores and 36 franchise stores. Lindex opened 4 new stores and closed 2 stores during the first quarter. In addition to the Lindex division's physical stores and own digital store,

the company also sells its products on third parties' digital fashion platforms and in physical stores.

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REVENUE BY MARKET

1-3/2024

REVENUE BY CHANNEL

1-3/2024

Service and rental income 10%

January-March 2024

The Stockmann division's revenue decreased to EUR 62.2 (72.0) million. The division's revenue in Finland totalled EUR 45.5 (52.9) million and in the Baltics EUR 16.6 (19.1) million. The digital sales accounted for 10.2% (11.1) of total sales. The main reason for the revenue decrease both in department stores and digital channels was the timing of the Crazy Days campaign. In the comparison period, the Crazy Days was partly ongoing in March, while in 2024, the campaign was held at the beginning of the second quarter in April. This Spring, the Crazy Days campaign performed better than the previous year. In addition, the reduced store area of the Stockmann Itis department store decreased the revenue.

Stockmann continued to further leverage the loyalty programme. The amount of active and new loyal customers grew and share of revenue from loyal customers increased. The division also continued to develop its loyalty programme by enhancing personalisation in marketing communications.

The gross profit decreased to EUR 26.5 (29.7) million due to the decreased sales. The gross margin increased to 42.7% (41.2) due to good inventory management. The inventories remained at the comparison period level despite the fact that the Crazy Days campaign started at the beginning of April while the year before Crazy Days started already in March. The Crazy Days campaign typically increases inventories temporarily.

The comparable operating costs decreased to EUR 28.3

(29.8) million as a result of continued successful cost savings which also mitigated the effect of inflation. Going forward, the ongoing investments in the digitalisation of logistics, warehouse automation and sales processes will further improve cost- efficiency.

The adjusted operating result decreased to EUR -9.4(-7.0) million due the timing of the Crazy Days campaign. Excluding the negative impact of the timing of Crazy Days, the adjusted operating result developed positively despite higher depreciations for finance leases. The operating result for the quarter decreased to EUR -11.9(-7.0) million impacted by costs related to restructuring programme.

Capital expenditure during the quarter was EUR 1.2 (2.1) million which was mainly related to investments in digital growth and omnichannel capabilities.

In March, the Stockmann division started to plan changes to improve efficiency, simplify management structures as well as clarify roles and responsibilities. The planned measures are estimated to generate annual savings of EUR 2.7 million, materialising from 2025 onwards.

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SUSTAINABILITY

Sustainability is embedded in Lindex Group's business plans and strategies. The Lindex and Stockmann divisions have their own sustainability strategies with climate, circularity, and human rights as common themes. Lindex's sustainability promise is to make a difference for future generations and Stockmann is aiming at resource-wise retail business.

Lindex Group is committed to the Science Based Targets initiative (SBTi) and has submitted its target to reduce greenhouse gas emissions by 42% by 2030 from the base year 2022 in the entire value chain (Scopes 1-3). The Group is expecting the SBTi's validation for its target in 2024. The Lindex and Stockmann divisions have defined a roadmap to reach the target and

are actively reducing their emissions. In 2023, the Group's greenhouse gas emissions declined by 11%.

The Group Sustainability Review and the Lindex Sustainability Report for 2023 were published during the first quarter.

Both divisions continued their systematic work towards their sustainability targets. In addition to the good results in reducing their climate impact, both divisions strengthened their circular approach. Lindex accelerated its commitment to circularity with new and existing partners, and in 2023, 42% of Lindex's assortment already had at least 15% recycled content. Stockmann developed circular design principles and solutions for its own brands.

PERSONNEL

Lindex Group's average number of personnel during the reporting period was 5 947 (5 997). In terms of full-time equivalents,

the average number of employees was 4 205 (4 309). At the end of March, Lindex Group's personnel numbered 5 988 (6 022), of whom 1 533 (1 582) were working in Finland, 2 064 (2 013) in Sweden and 2 391 (2 427) in other countries. The Group's wages and salaries amounted to EUR 40.0 (39.3) million in the first quarter of 2024.

In March, the Stockmann division started to plan changes to improve efficiency, simplify management structures as well as clarify roles and responsibilities. The planned changes will affect part of the Stockmann division's personnel in all three operating countries: Finland, Estonia and Latvia. In Finland, the plans were addressed in change negotiations, which were concluded after the reporting period in April. The changes are estimated to generate annual savings of EUR 2.7 million, materialising from 2025 onwards.

DECISIONS BY THE ANNUAL GENERAL MEETING

The Annual General Meeting (AGM), held on 21 March 2024, adopted the financial statements for the financial year 1 January - 31 December 2023, granted discharge from liability to the persons who had acted as members of the Board of Directors and as CEO during the financial year and resolved that no dividend be paid for the financial year 2023.

The AGM resolved to change the company's business name from Stockmann plc to Lindex Group plc, and to change Article 1 of the company's Articles of Association as follows: The company's business name in English is Lindex Group plc, in Finnish Lindex Group Oyj, in Swedish Lindex Group Abp and it is domiciled in Helsinki. Furthermore, the AGM decided to change the company's Articles of Association to enable arranging a General Meeting as a virtual meeting without a meeting venue as an alternative for

a physical meeting or a hybrid meeting.

The AGM resolved that the number of members of the Board of Directors would be six. Stefan Björkman, Timo Karppinen, Roland Neuwald, Sari Pohjonen, Tracy Stone and Harriet Williams were re-elected as members of the Board of Directors. In its organisational meeting the Board of Directors elected Sari Pohjonen as its Chair and Roland Neuwald as its Vice Chair. The Board of Directors decided to establish an Audit Committee and a People and Remuneration Committee. Timo Karppinen was elected as Chair of the Audit Committee, and Roland Neuwald and Sari Pohjonen as the other members. Stefan Björkman was elected as Chair of the People and Remuneration Committee and Sari Pohjonen, Tracy Stone and Harriet Williams as the other members.

The AGM resolved to re-elect audit firm Ernst & Young Oy as the auditor and also as the sustainability reporting assurance provider of the company. Ernst & Young Oy has notified that Terhi Mäkinen, APA, will act as the responsible auditor. In addition, the AGM resolved to adopt the Remuneration Report of the governing bodies for the financial year 2023. The decision was advisory.

The decisions by the AGM were published in full as a stock exchange release on 21 March 2024.

SHARES AND SHARE CAPITAL

At the end of March, Lindex Group plc had a total of 159 023 044 shares.

According to the restructuring programme, the company may not distribute the company's assets to shareholders during the implementation of the repayment schedule under the restructuring programme.

At the end of March, the share capital was EUR 77.6 million and the market capitalisation stood at EUR 513.6 million (322.7). The price of a LINDEX share was EUR 3.23 (2.07) at the end of March 2024. In January-March, the highest price of a LINDEX share was 3.26 (2.20) and the lowest price was 2.71 (1.68). A total of 9.4 million shares were traded on Nasdaq Helsinki in January-March. This corresponds to 5.9% of the average number of shares.

The company does not hold any of its own shares, and the Board of Directors has no valid authorisations to purchase company shares. At the end of March, Lindex Group had 41 717 (43 978) shareholders. Foreign ownership was 26.3% (19.5).

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BUSINESS CONTINUITY, RISKS AND UNCERTAINTIES

Lindex Group is exposed to risks that arise from the operating environment, risks related to the company's own operations and supply chain as well as financial risks. The Group's key risks are related to the macroeconomic situation and its possible negative effects on consumer behaviour as well as currency exchange rate fluctuations. As the Group's supply chain is global, unexpected logistics problems could increase freight costs and lead times.

In addition, Lindex Group's business is affected by normal, seasonal fluctuations during the year. More detailed information on Lindex Group's risks is given in the Financial Review 2023 at https://report.stockmanngroup.com/year2023/.

Lindex Group plc's restructuring programme is proceeding according to plan, which means that all of Stockmann's department store properties have been sold and all interest- bearing debt has been paid except for a bond of EUR 71.9 million. At the end of March, there were two remaining disputed claims regarding the termination of lease agreements that must be settled before the restructuring process can end. After the review period, one of them was settled.

DISPUTES RELATED TO THE

RESTRUCTURING PROCESS

All confirmed undisputed debts have been duly paid. There were still two disputed claims left at the end of March with the total amount of EUR 29.1 million. By end of March 2023, the comparable disputed amount was EUR 61.3 million. The remaining disputed claims are related to the termination of long- term leases of premises, where the creditors claim payment for all remaining years in the terminated lease contracts. The supervisor of the restructuring programme has disputed the claims and considered it justified to pay 18 months' compensation for

the leases.

Lindex Group plc has made a provision of EUR 15.9 million for the disputed claims and is having ongoing discussions with creditors and the supervisor of the restructuring programme to solve the disputes. If they are not solved with the creditors and the administrator, the disputes will be settled in the District Court. After respective claims have been solved or settled, the creditors will be entitled to convert their receivable to shares and bonds.

LähiTapiola Keskustakiinteistöt Ky, the landlord of Stockmann's Tapiola department store, initiated arbitration proceedings against Lindex Group plc in which the company demanded up to EUR 43.4 million in compensation from Lindex Group plc in accordance with section 27, subsection 1 of the Restructuring Act. The supervisor of the restructuring proceedings disputed the demand of LähiTapiola Keskustakiinteistöt Ky in the restructuring programme to the extent that it exceeds EUR 3.5 million. In connection with the same, LähiTapiola Keskustakiinteistöt Ky filed a claim against Lindex Group plc, Stockmann AS and the supervisor at the Helsinki District Court to leave the matter

in abeyance. On 31 August 2022, the Arbitration Court in its arbitration decision partially rejected the claims of LähiTapiola Keskustakiinteistöt Ky and confirmed that the compensation to be paid to LähiTapiola Keskustakiinteistöt Ky is EUR 19.3 million, of which a previously agreed undisputed amount of EUR 3.4 million was converted to shares and paid. Lindex Group plc has filed a claim in the District Court regarding the nullity and the application for annulment regarding the decision given in the

arbitration proceedings between LähiTapiola Keskustakiinteistöt Ky and Lindex Group plc. As a result, EUR 15.9 million is seen as a disputed case again. The remaining compensation to be paid has been recognised as a provision and will be re-classified as restructuring debt after the confirmation of the Court. An arbitration procedure separate from Lindex Group plc's arbitration procedure is in progress between LähiTapiola and Stockmann AS concerning the amount of compensation to be paid to LähiTapiola as part of the restructuring proceedings, as well as a separate dispute in the Helsinki District Court. In addition, concerning this same amount of compensation, a dispute is in progress between the supervisor and LähiTapiola. The supervisor deems LähiTapiola's receivable to be under dispute until the claims mentioned above have been finally resolved. The supervisor has announced to the company and the Helsinki District Court that the supervisor will not request the District Court to amend the restructuring programme based on the arbitration decision while the receivable is under dispute. It is the supervisor's view that no payment based on the arbitration decision must be made to LähiTapiola while the amount of the receivable is under dispute, because the company, the supervisor and Stockmann AS consider the arbitration decision to be erroneous. LähiTapiola has applied to the Helsinki District Court to amend Lindex Group plc's restructuring programme so that the amount of the restructuring debt, based on the arbitration decision, would be confirmed at EUR 19.3 million. Lindex Group plc, Stockmann AS and the supervisor objected to the application because the claimed amount is still disputed. The District Court and Court of Appeal have rejected LähiTapiola's application. LähiTapiola has applied for leave to appeal to the Supreme Court.

Nordika II SHQ Oy, the landlord of Lindex Group plc's former Takomotie office space, has filed a claim with the Helsinki District Court in which the company demands compensation amounting to a maximum of EUR 14.5 million from Lindex Group plc in accordance with section 27, subsection 1 of the Restructuring Act. This claim has been disputed by the supervisor of the restructuring programme to the extent that it exceeds EUR 1.3 million. The EUR 1.3 million was converted to shares and paid in March 2022, but the difference is still a claim. In the same claim, Nordika II SHQ Oy has named the supervisor and Lindex Group plc as respondents.

Tampereen Seudun Osuuspankki, the second lessor of the Tampere department store, had initiated proceedings at the Pirkanmaa District Court in which the company demands up to EUR 14.5 million compensation from Lindex Group plc in accordance with section 27, subsection 1 of the Restructuring Act. In the restructuring programme, the supervisor had disputed the claim presented by Tampereen Seudun Osuuspankki during the restructuring proceedings (at which time the maximum amount of the claim was EUR 17.7 million) to the extent that it exceeded EUR 2.0 million. On 6 February 2024, Lindex Group plc and Tampereen Seudun Osuuspankki reached a settlement agreement, which ended the disputed claims between the parties concerning the restructuring programme. The Helsinki District Court has confirmed the amendment of the payment programme of the restructuring programme on 26 March 2024, which allows the settlement agreement to be executed.

On 25 January 2024, the company's Board of Directors decided, in accordance with the restructuring programme and pursuant to the authorisation granted by the Annual General Meeting, to issue 307 489 new shares of the company in deviation from the shareholders' pre-emptive subscription rights to a creditor of the company whose previously conditional or disputed restructuring

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debt under the restructuring programme were confirmed to its final amount by 9 November 2023. The new shares were registered with the Finnish Trade Register on 26 January 2024.

On 25 January 2024, Lindex Group plc announced that it had received and verified one subscription form from an entitled person whose previously conditional or disputed receivable subject to the payment programme of the restructuring programme has been clarified and the final amounts of such receivable has been confirmed. The Subsequent Bonds duly subscribed for by such entitled person amount to the aggregate principal amount of EUR 1 120 000. The receivable of the entitled person will be converted, by way of set-off, into Subsequent Bonds. The Subsequent Bonds are settled through the clearance system of Euroclear Finland Ltd and will be recorded on the book-entry accounts maintained by Euroclear Finland Ltd as soon as practicably possible. Lindex Group plc also submitted an application for the issued Subsequent Bonds to be admitted to trading on the list of Nasdaq Helsinki Ltd together with the already trading fungible Bonds under the trading code "STCJ001026".

EVENTS AFTER THE REPORTING PERIOD

After the reporting period in April, Lindex Group plc and disputed creditor Nordika II SHQ Oy reached a settlement agreement, which ends the disputed claims between the parties concerning the restructuring programme. Execution of the settlement agreement is subject to the court confirming the amendment of the payment programme of the restructuring programme. The amendment application will be submitted to the Helsinki District Court. After this agreement, there is one disputed claim left with the total amount of EUR 15.9 million.

On 26 April 2024, Chief Financial Officer (CFO) of Lindex Group plc and member of the Group Management Team Annelie Forsberg decided to leave the company to pursue new career opportunities outside the company. She will continue working at Lindex Group until early autumn 2024. The recruitment process for a new CFO has been initiated.

FINANCIAL RELEASES IN 2024

Lindex Group will publish its financial reports in 2024 as follows:

• 19 July 2024, Half year Financial Report for January-June
• 25 October 2024, Interim Report for January-September

WEBCAST FOR ANALYSTS AND THE MEDIA

A media and analyst briefing will be held in English as a live webcast today, on 26 April 2024 at 10:00 a.m. EET. The event can be followed via this link. The recording and presentation material will be available on the company's website after the event.

Helsinki, 25 April 2024

LINDEX GROUP plc

Board of Directors

Further information: Susanne Ehnbåge, CEO Annelie Forsberg, CFO

Contact via Lindex Group's MediaDesk info@stockmann.com, tel. +358 50 389 0011

Marja-Leena Dahlskog, Head of Communications & IR, tel. + 358 50 502 0060

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