Stockmann - Interim report (Q1 and Q3)

Stockmann Group’s Interim Report 1 January - 31 March 2014

Operating result down due to weak Russian rouble and challenging market

Helsinki, Finland, 2014-04-29 07:00 CEST (GLOBE NEWSWIRE) -- STOCKMANN plc,
Interim Report 29.4.2014 at 8.00 EET 

January-March 2014:
Consolidated revenue was EUR 395.6 million (EUR 431.3 million), down 7.6 per
cent excluding terminated franchising operations, or down 4.6 per cent at
comparable exchange rates. 
Operating result was EUR -43.9 million (EUR -34.6 million).
Result for the period was EUR -40.1 million (EUR -36.5 million).
Earnings per share came to EUR -0.56 (EUR -0.51).

Revised profit guidance for 2014:
Due to the weak currency exchange rates and weaker than expected consumer
demand in Russia and Finland, Stockmann estimates that the Group's
euro-denominated revenue in 2014 will decline on 2013. Operating profit is not
expected to exceed the figure for 2013. 

Stockmann previously estimated that the Group's revenue, at comparable exchange
rates, would increase slightly in 2014. Revenue growth was expected to take
place in the second half of the year. Operating profit was expected to be
somewhat higher than in 2013. 

CEO Hannu Penttilä:
”The Russian rouble was at its weakest-ever level against the euro during the
first quarter of 2014. The Russian economy has stagnated and consumers'
purchasing power has declined. In Finland, the retail market also remained
weak. These factors had a clearly negative impact on the Stockmann Group's
performance in the quarter. 

The Department Store Division's rouble-denominated revenue was slightly up, but
operations in Russia were significantly affected by the weak currency. Revenue
and operating result in the Baltic countries were up. In Finland, performance
improved slightly towards the end of the quarter. 

Similar development was seen in the Crazy Days campaign in April, which took
place after the reporting period. The campaign's revenue was close to the
previous year's level at comparable exchange rates, but euro-denominated
revenue was down 6 per cent in total. Revenue was up in the Baltic countries
and in Russia in roubles, but euro-denominated revenue was down in Russia and
in Finland, despite the strong sales growth in the online store. 

Our fashion chains continued their mixed performance in the first quarter.
Lindex's revenue was up in local currencies and its operating result improved
slightly. Seppälä's result weakened further, despite store closures and other
turnaround efforts. 

There are no signs of a quick recovery for the Russian rouble and the
visibility in the Russian market is very weak. The retail market in Finland
also remains challenging. We have started structural changes at Stockmann to
improve the competitiveness in the weak market environment. The new operating
model for our department stores in Finland is vital for ensuring competitive
operations in the future.” 

New projects
Total capital expenditure for 2014 is estimated to be approximately EUR 60
million, which is less than the estimated depreciation of approximately EUR 75
million. Most of the capital expenditure will be used for expansion and
refurbishment of the Lindex stores, department store renovations and IT system
renewals. 

The Tampere department store will gain more retail space in the construction
project, due for completion in the last quarter of 2014. Planning for the new
Tapiola department store continues, but the timetable is dependent on Espoo
City's planning for the area. 

Stockmann's new distribution centre for its department stores and online store
in Finland and the Baltic countries will be taken into use in 2016. The centre
will be located in leased premises. Stockmann will make an investment of
approximately EUR 28 million in the centre's automation technology. 

Lindex will continue to expand with a net addition of over 20 stores in 2014,
including franchising stores. Lindex entered into a franchising partnership
with the Chinese company Suning in September 2013. Suning unilaterally withdrew
from the franchising agreement at the end of March 2014. Lindex will
investigate other opportunities to expand into the Chinese market, but Suning's
withdrawal will delay the fashion chain's entry to the market. 

Seppälä aims to close down over 20 unprofitable stores in Russia in 2014.

Outlook for 2014
The Russian rouble has weakened considerably and economic growth in Russia is
estimated to stay on a low level in 2014. The crisis in Ukraine continues to
affect the Russian economy. As a consequence, the visibility in the Russian
retail market is very weak. 

The European economy is expected to improve slightly in 2014, but uncertainty
will continue in the retail market, particularly in Finland. Purchasing power
is expected to remain low, which will have a negative effect on consumer
purchasing behaviour. 

The outlook for the affordable fashion market in Sweden is expected to improve
slightly in 2014. The retail market in the Baltic countries is expected to
remain relatively stable. Low consumer confidence may, however, affect
consumers' willingness to make purchases in all market areas. 

As a consequence of the uncertain outlook, Stockmann launched a cost savings
programme in spring 2013. The programme will continue in 2014, focusing on
long-term structural changes in order to adapt the cost structure to the slow
growth and to improve performance. 

The Group's capital expenditure is estimated to be lower than depreciation, and
to amount to approximately EUR 60 million in 2014. 

Revised profit guidance for 2014: Due to the weak currency exchange rates and
weaker than expected consumer demand in Russia and Finland, Stockmann estimates
that the Group's euro-denominated revenue in 2014 will decline on 2013.
Operating profit is not expected to exceed the figure for 2013. 

Earlier profit guidance, published on 13 February 2014: At comparable exchange
rates, Stockmann expects the Group's revenue to increase slightly in 2014.
Revenue growth is expected to take place in the second half of the year.
Operating profit is expected to be somewhat higher than in 2013. 

Key figures

                                                   1-3/2014  1-3/2013  1-12/2013
Revenue, EUR mill.                                    395.6     431.3    2 037.1
Revenue growth, %                                      -8.3      -4.2       -3.7
Gross margin, %                                        45.5      45.8       48.6
Operating profit, EUR mill.                           -43.9     -34.6       54.4
Net financial costs, EUR mill.                          5.5       6.0       27.6
Profit before tax, EUR mill.                          -49.3     -40.7       26.8
Profit for the period, EUR mill.                      -40.1     -36.5       48.4
Earnings per share, undiluted, EUR                    -0.56     -0.51       0.67
Equity per share, EUR                                 11.44     11.31      12.42
Cash flow from operating activities, EUR mill.       -112.9    -111.3      125.4
Capital expenditure, EUR mill.                          9.4      11.5       56.8
Net gearing, %                                        107.8     116.2       87.3
Equity ratio, %                                        39.9      37.7       43.8
Number of shares, undiluted, weighted average, 1     72 049    72 049     72 049
 000 pc                                                         
Return on capital employed,                             2.8       4.0        3.4
rolling 12 months                                                               
Personnel, average                                   14 302    14 829     14 963


This company announcement is a summary of the Stockmann's Interim Report for 1
January - 31 March 2014 and includes the most relevant information of the
report. The complete report is attached to this release as a pdf file and is
also available on the company's website at stockmanngroup.com. 

Press and analyst briefing and conference call
A press and analyst briefing in Finnish will be held today, on 29 April 2014 at
9.15 a.m. at the Fazer À la Carte restaurant on the 8th floor of Stockmann's
Helsinki city centre department store, Aleksanterinkatu 52. 

A conference call in English will be held today, on 29 April 2014 at 11.15 a.m.
EET. To participate the conference call, please dial +358 9 8864 8511 and, when
requested, key in the meeting room number *657899* including the asterisks. The
presentation material will be available for downloading on the company's
website from 9.15 a.m. EET onwards. 

Further information:
Hannu Penttilä, CEO, tel. +358 9 121 5801
Pekka Vähähyyppä, CFO, tel. +358 9 121 3351

www.stockmanngroup.com


STOCKMANN plc

Hannu Penttilä
CEO


Distribution:
NASDAQ OMX
Principal media

Attachments:

Stockmann Q1 2014 ENG.pdf