Mild weather and lower consumption reduces Lindex's profit

Mild weather and lower consumption reduces Lindex's profitLindex's profit after financial income and expenses for September-November2000 is preliminarily expected to amount to SEK 14M. The profit has beenaffected by the mild autumn weather and reduced consumer readiness to buy.Clothing sector hit by the mild weatherThe very mild autumn weather has meant a lower sales rate in the clothingindustry. In October, one of the year's highest sales months, 6.4 per centless clothing was sold compared with October 1999. The weather has had anegative effect on sales of both autumn and winter clothing.Reduced readiness to buy among the consumersDuring the period, the customers' readiness to buy also reducedsignificantly from an overall perspective. One example of this is SCB'sConsumer Confidence Indicator which shows a 26 per cent fall betweenAugust and November. Signs of an embryonic slowdown in the economy havealso been noticed in other sectors, such as sales of cars.Norway, Finland and Germany, Lindex's markets outside Sweden, also showsimilar changes in sales and readiness to buy.Fall in first quarter profitIn total, these external changes have meant that sales for the firstquarter (September-November 2000) are preliminarily expected to amount toSEK 1 173M (1 019), operating profit to SEK 11M (74) and profit afterfinancial income and expenses to SEK 14M (79).Ahead of Autumn 2000 the sector's high growth rate was expected tocontinue. However, demand fell during October and November. In order toreduce the inventories, larger than normal price reductions wereimplemented during the period. This enabled the sales volumes to bemaintained but meant that gross profit margins have reduced. Despite theprice reductions, the value of the inventories was higher on 30 Novemberthan on the same date in the previous year.Action programme initiatedLindex has initiated an action programme aimed at strengtheningprofitability under these new conditions. The action programme includes areview of costs and investment, including plans for new store openings.Sales during the first half of December are on par with the previous year.The need for price reductions remains. This is also expected to lead tolower gross profit margins and higher inventory value in December.Board of DirectorsAB Lindex (publ)For further information, please contact:Hans Johansson, President and CEO tel +46 322-77 702Leif Larsson, Executive Vice President andHead of Investor Relations tel +46 322-77 734Åsa Lindell Byström, Head of Group Communicationstel +46 322 744 00 mobile +46 706 33 59 79Lindex is a retail chain with more than of 340 stores, of which more than310 are in the Nordic market and 31 stores in Germany. The Group's productsegments are ladies' wear, lingerie, children's clothing and Lindex Care -cosmetics and body care products.------------------------------------------------------------This information was brought to you by BIT http://www.bit.seThe following files are available for download:

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