Stockmann - Inside information

Stockmann to sell its Delicatessen business in Finland to S Group – Stockmann Delicatessen stores will remain in all department stores

Stockmann plc, Stock Exchange Release, 30 June 2017 at 8:30 EET

Stockmann plc and S Group have signed an agreement on the sale of the Stockmann
Delicatessen business operations in Finland to S Group’s regional cooperatives.
The Stockmann Delicatessen business operations in the Baltic countries will
remain with Stockmann. The Stockmann Delicatessen stores will continue to
provide customers with first-class service and a unique, high-quality selection
in all Stockmann department stores.

The transaction includes all Stockmann Delicatessen business operations in
Finland. The six Delicatessen stores will be transferred to the HOK-Elanto,
Turku and Tampere Regional Cooperatives. The Delicatessen chain operations will
be transferred to SOK and the Stockmann Delicatessen kitchen, which prepares
Stockmann Meals foods, will be transferred to Meira Nova, a subsidiary of SOK.
Stockmann Delicatessen has around 800 employees in Finland. They will transfer
to S Group as existing employees. The regional cooperatives will become a major
partner of Stockmann Real Estate, when they start as tenants in facilities owned
by Stockmann and as a subtenant in facilities rented by Stockmann.

The transaction is subject to approval from the Finnish Competition and Consumer
Authority. If approval is granted during 2017, the transaction can be completed
on 31 December 2017. The debt-free transaction price, EUR 27 million, will be
paid in cash at the time of closing, and the transaction will have a positive
cash flow effect of around 20 million. Stockmann will recognise a one-time
capital gain of around 3 million on the transaction. The transaction will
improve the Stockmann Group’s profitability from 2018 onwards.

“To generate profitable growth, Stockmann must make strategic choices. Changes
particularly in the food procurement and logistics market in Finland have
affected Stockmann Delicatessen’s competitiveness. The Delicatessen business
will join forces with S Group, which has the willingness and resources to
further develop Delicatessen and to ensure that our customers will continue to
have access to the best grocery stores in Finland,” says Lauri Veijalainen, CEO
of Stockmann.

“Our goal is to develop the Delicatessen stores into S Group’s flagship stores.
We are aiming for the top level in Europe, and the Delicatessen stores’ highly
competent employees will play a crucial role in this respect. We have a great
deal to learn from them,” says Arttu Laine, Executive Vice President at SOK.

Stockmann Delicatessen’s revenue in Finland, excluding the Oulu store, was EUR
127 million in 2016, with an operating loss of EUR 11 million. The stores
represented 25% of Stockmann Retail’s merchandise sales and 12% of the Stockmann
Group’s merchandise sales in 2016.

Stockmann Retail to focus on fashion, beauty and home products

The Stockmann Retail business operations consist of six department stores and
the stockmann.com online store in Finland and two department stores in the
Baltic countries. In line with its strategy, Stockmann cooperates with partners
to complement its own selection of products and services. The partners offer a
product mix of e.g. electronics, books, toys, jewellery and in the future, also
food products in the Stockmann department stores.

“After careful consideration, Stockmann has decided to focus on fashion, beauty
and home products in its own store operations in Finland. We are among the best
in Finland in these segments and have an opportunity to further strengthen our
market position. This decision will help us achieve a positive operating result
for Stockmann Retail in 2018,” says Veijalainen.

Stockmann Retail will continue to run the Delicatessen Stores in the Baltic
countries as before. In the Baltic countries, the proportion of food in the
total sales is larger than in Finland, and the Delicatessen operations are
profitable there. Local units operating as part of the department stores in Riga
and Tallinn are responsible for food buying and other business operations in
respective markets.

Outlook 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.

Press and analyst conferences

Stockmann and S Group will hold a Finnish-language press conference at the
Restaurant Savoy on Friday, 30 June 2017 at 10.30 a.m. (EET). Lauri Veijalainen,
CEO of Stockmann, and Arttu Laine, ‎Executive Vice President at SOK, will
provide information about the transaction at the event. Other management
representatives of the companies will also be present. Advance registration is
not required.

Stockmann will hold an English-language audiocast for analysts and investors on
Friday 30 June 2017 at 1 p.m. (EET) where CEO Lauri Veijalainen and Nora Malin,
Director, Corporate Communications, will be present. To participate in the
webcast, please dial one of the numbers below 5–10 minutes before the webcast
begins. The presentation can be followed on the address stockmanngroup.com. The
recording and presentation material are available on the company's website after
the event.

Finland: +358 (0)9 7479 0404
Sweden: +46 (0)8 5065 3942
United Kingdom: +44 (0)330 336 9412
United States of America: +1 719 457 1036

Confirmation code: 1546697

Further information:
Lauri Veijalainen, CEO, 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