Stockmann - Interim report (Q1 and Q3)

Stockmann Group’s Interim Report 1 January - 31 March 2017

Operating result continued to improve
STOCKMANN plc, Interim report 28.4.2017 at 8:00 EET

JANUARY-MARCH 2017:

- Consolidated revenue was EUR 242.7 million (273.1).
- Revenue in comparable businesses was down by 2.9%.
- Gross margin was 51.1% (50.2%).
- Operating result was EUR -27.8 million (-30.3).
- Earnings per share were EUR -0.43 (-0.46).

- Due to normal seasonal variation, the first-quarter operating result is
typically negative.
- Guidance for 2017 remains unchanged: Stockmann expects the Group’s revenue for
2017 to decline due to changes in the store network and product mix. Adjusted
operating profit is expected to improve, compared with 2016.

CEO LAURI VEIJALAINEN:

Our turnaround journey continued in the first quarter with improved performance
in both Stockmann Retail and Real Estate. In Sweden, the fashion market declined
during the first quarter, which affected the Lindex result negatively. As a
whole, the Group’s operating result improved slightly.

In Stockmann Retail, improvements in the selection, customer service and
shopping environment are starting to be visible for our customers. In the first
quarter, non-food sales in our department stores were already on the previous
year’s level. The good progress in efficiency measures continued, and the cost
savings are clearly visible in Retail’s comparable operating result, which is up
by over EUR 6 million.

Real Estate continued to perform well during the quarter thanks to increased
rental income particularly in the Nevsky Centre shopping centre. The centre also
acquired several new tenants during the quarter. An investigation into the
possible sale of the property is progressing, and we have reclassified the
property as an asset held for sale.

Lindex’s revenue increased in all other markets except Sweden and Norway. The
result in these main markets was lower than expected, and actions are already
being taken to improve the performance going forward.

In the Crazy Days campaign, which took place in Stockmann stores after the first
quarter, sales were close to the previous year’s level. The campaign got off to
a strong start on Wednesday and the online store was very successful during the
entire campaign. Now we will put our efforts into achieving strong performance
during the rest of the second quarter. Further measures to stabilise and boost
sales will be carried out in all the divisions.

KEY FIGURES

                                     1-3/    1-3/    1-12/
                                     2017    2016     2016
Revenue, EUR mill.                  242.7   273.1  1 303.2
Gross margin, %                      51.1    50.2     53.4
EBITDA, EUR mill.                   -12.5   -16.2     76.8
Adjusted EBITDA*, EUR mill.         -12.5   -16.2     79.4
Operating result (EBIT), EUR        -27.8   -30.3     17.6
mill.
Adjusted operating result           -27.8   -30.3     20.2
(EBIT)*, EUR mill.
Net financial items, EUR mill.       -4.6    -4.3    -23.1
Result before tax, EUR mill.        -32.4   -34.6     -5.5
Result for the period, EUR mill.    -29.6   -31.6    -18.2
Earnings per share, undiluted and   -0.43   -0.46    -0.33
diluted, EUR
Personnel, average                  7 929   9 299    9 006

                                     1-3/    1-3/    1-12/
                                     2017  2016**   2016**
Net earnings per share, undiluted   -0.43   -0.31    -0.12
and diluted, EUR
Cash flow from operating            -78.1   -75.3     41.5
activities, EUR mill.
Capital expenditure, EUR mill.        7.8     5.9     44.2
Equity per share, EUR               14.46   14.20    14.99
Net gearing, %                       79.9    81.6     68.3
Equity ratio, %                      46.1    44.8     48.3
Number of shares, undiluted and    72 049  72 049   72 049
diluted, weighted average, 1 000
pc
Return on capital employed,           1.3    -5.3      1.8
rolling 12 months, %

* There were no adjustments made in the first quarter in 2017 or 2016. For full
-year 2016, adjustments affecting operating result were EUR 2.6 million and they
were mostly related to ICT outsourcing.
** Includes department store operations in Russia which were discontinued in the
first quarter of 2016.

Stockmann uses Alternative Performance Measures according to the guidelines of
the European Securities and Market Authority (ESMA) to better reflect the
operational business performance and to facilitate comparisons between financial
periods. Gross profit is calculated by deducting the costs of goods sold from
the revenue, and gross margin is calculated by dividing gross profit by the
revenue as a percentage. EBITDA is calculated from operating result excluding
depreciation. Adjusted EBITDA and adjusted operating result (EBIT) are measures,
which exclude non-recurring items affecting comparability from the reported
EBITDA and reported operating result (EBIT). Stockmann also uses the term
“revenue in comparable businesses” which refers to revenue excluding Hobby Hall,
which was divested on 31 December 2016, the Oulu department store, which was
closed on 31 January 2017, and the Lindex stores in Russia, which were closed in
2016.

OUTLOOK FOR 2017

In the Stockmann Group’s largest operating country, Finland, the economy has
slowly begun to recover. GDP and the retail market are expected to grow slightly
in 2017. Consumers’ purchasing power is, however, not expected to increase and
purchasing behaviour is changing due to digitalisation and increasing
competition.

The Swedish economy remained stable in 2016 and the GDP growth estimate for 2017
remains on a higher level than in Finland. The steady growth in the fashion
market stagnated in 2016, and the market is expected to decline in 2017.

In the Baltic countries, GDP growth is estimated to continue. The outlook for
these countries is expected to be better than that for the Stockmann Group’s
other market areas.

The Russian economy is expected to recover gradually, but the purchasing power
of Russian consumers remains low.

Stockmann will continue improving the Group’s long-term competitiveness and
profitability. The efficiency measures launched in summer 2016 will be fully
visible in the 2017 operating costs. Improvements in the operating result in
2017 are estimated to come mainly from the Stockmann Retail division, which is
still loss-making, while Lindex and Real Estate are expected to continue their
profitable performance.

GUIDANCE FOR 2017

Stockmann expects the Group’s revenue for 2017 to decline due to changes in the
store network and product mix. Adjusted operating profit is expected to improve,
compared with 2016.

Press and analyst briefing
A press and analyst briefing will be held today, on 28 April 2017 at 9:15 a.m.
EET in the Fazer À la Carte restaurant on the 8th floor of Stockmann’s Helsinki
city centre department store, Aleksanterinkatu 52 B.

Webcast
CEO Lauri Veijalainen will host a webcast in English today, on 28 April 2017, at
11:15 a.m. EET presenting the Interim Report. To participate in the webcast,
please dial one of the numbers below 5–10 minutes before the webcast begins. The
presentation can be followed by this link (https://stockmann.videosync.fi/2017
-04-28-q1/register) or on the address
stockmanngroup.com. (http://www.stockmanngroup.com) The recording and
presentation material are available on the company's website after the event.

Finland: +358 (0)9 7479 0361
Sweden: +46 (0)8 5033 6574
United Kingdom: +44 (0)330 336 9105
United States of America: +1 719 457 2086

Confirmation code: 2243000

Further information:
Lauri Veijalainen, CFO, tel. +358 9 121 5062
Nora Malin, Director, Corporate Communications, tel. +358 9 121 3558

www.stockmanngroup.com

STOCKMANN plc

Lauri Veijalainen
CEO

Distribution:
Nasdaq Helsinki
Principal media

Attachments:

04275331.pdf