Stockmann - Interim report (Q1 and Q3)

Stockmann Group’s Interim Report 1 January - 30 June 2014

Weak quarter in challenging market environment

Helsinki, Finland, 2014-08-13 07:00 CEST (GLOBE NEWSWIRE) -- STOCKMANN plc,
Interim Report 13.8.2014 at 8.00 EET 

April-June 2014:
Consolidated revenue was EUR 495.3 million (EUR 543.6 million), down 8.9 per
cent, or down 5.1 per cent at comparable exchange rates. 
Operating profit was EUR 3.5 million (EUR 30.1 million).

January-June 2014:
Consolidated revenue was EUR 890.9 million (EUR 974.9 million), down 8.3 per
cent excluding terminated franchising operations, or down 4.9 per cent at
comparable exchange rates. 
Operating result was EUR -40.3 million (EUR -4.6 million).
Result for the period was EUR -48.2 million (EUR -17.1 million).
Earnings per share came to EUR -0.67 (EUR -0.24).

Guidance for 2014 (revised 12 June 2014):
Stockmann estimates that the Group's euro-denominated revenue in 2014 will
decline on 2013. The Group's operating profit in 2014 is expected to be
significantly weaker than in 2013. 

CEO Hannu Penttilä:
”The retail market is undergoing significant changes in Finland. Consumer
confidence remains low and demand for non-food products has clearly declined.
We at Stockmann have not succeeded in beating this negative market development.
Online business is changing consumer behaviour, but online stores are not yet
compensating for the dramatic decline in traditional retail. At the same time,
the market environment in Russia continues to be challenging, as the Russian
rouble remains weak and the country's future economic direction is unclear. The
market environment in the Baltic countries, Sweden and Norway has been stable. 

Stockmann's revenue in the second quarter of 2014 was down. Lindex continued to
perform well and its revenue grew in local currencies. However, Lindex's
euro-denominated revenue declined, due to currency effects. For the Department
Store Division and Seppälä, revenue in the second quarter was a major
disappointment. 

As a result of the decrease in sales and lower gross margin, the Stockmann
Group's earnings fell significantly below the figure for 2013, particularly in
Finland and in Russia. A number of measures have been taken to strengthen
sales, improve customer service and bring the cost structure in line with the
weak market conditions. These measures include the new sales organisation
structure in the department stores in Finland. Savings from these changes will
mainly be visible from 2015 onwards, though the Group's costs in the first half
of the year were lower than in 2013. The outlook for the rest of 2014 is
challenging, since there are no signs of any significant improvement in the
market environment.” 

New Group strategy
Stockmann has started a process to review and revise its strategy. The process
covers all of the Group's operations in all markets, and the target is to
improve Stockmann's long-term competitiveness and profitability. 

As a part of the strategy process, Stockmann will introduce a new reporting
structure in order to better reflect the different business logics in retail
and real estate. This will be done to increase focus and transparency and to
optimise the use of floor space in order to improve the customer experience.
From 1 January 2015 the new reporting segments will be: Stockmann Retail, Real
Estate and Fashion Chains. 

Stockmann Retail will consist of the Stockmann department stores, the Academic
Bookstore, Hobby Hall, their respective online stores (Stockmann.com,
Akateeminen.com and Hobbyhall.fi) and the Stockmann Beauty cosmetic stores.
Real Estate will consist of the Group's real estate holdings in Helsinki, St
Petersburg, Tallinn and Riga which are used by the Stockmann department stores
and external tenants. Fashion Chains will consist of Lindex and Seppälä. 

Stockmann's interim report for January-September 2014 and the financial
statements for 2014 will be based on the current reporting structure. The 2014
figures will be restated in line with the new reporting structure for
comparison purposes, and these restated figures will be published during the
first quarter of 2015. 

Outlook for 2014
The Russian rouble has weakened considerably and economic growth in Russia is
expected to remain at a low level in 2014. The crisis in Ukraine, sanctions
against Russia and their counter-measures will continue to affect the Russian
economy during the year. As a consequence, visibility is very weak in the
Russian retail market. 

In Finland, uncertainty will continue in the retail market. Demand for non-food
products is expected to remain weak in the second half of the year. Purchasing
power is expected to remain low, which will have a negative effect on consumer
purchasing behaviour. 

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 is continuing in 2014, focusing on
long-term structural changes in order to adjust the cost structure to the weak
market and to improve performance. In Stockmann's on-going strategy process the
target is to improve the Group's long-term competitiveness and profitability. 

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

Stockmann estimates that the Group's euro-denominated revenue in 2014 will
decline on 2013. The Group's operating profit in 2014 is expected to be
significantly weaker than in 2013. 

Key figures


                                            4-6/    4-6/    1-6/    1-6/   1-12/
                                            2014    2013    2014    2013    2013
Revenue, EUR mill.                         495.3   543.6   890.9   974.9       2
                                                                           037.1
Revenue growth, %                           -8.9     1.2    -8.6    -1.3    -3.7
Relative gross margin, %                    48.1    49.1    47.0    47.7    48.6
Operating profit, EUR mill.                  3.5    30.1   -40.3    -4.6    54.4
Net financial costs, EUR mill.               7.3     8.5    12.7    14.5    27.6
Profit before tax, EUR mill.                -3.8    21.6   -53.1   -19.1    26.8
Profit for the period, EUR mill.            -8.1    19.5   -48.2   -17.1    48.4
Earnings per share, undiluted, EUR         -0.11    0.27   -0.67   -0.24    0.67
Equity per share, EUR                                      11.28   11.50   12.42
Cash flow from operating activities, EUR    77.5   101.4   -35.5    -9.8   125.4
 mill.                                                                          
Capital expenditure, EUR mill.              17.8    16.9    27.3    28.4    56.8
Net gearing, %                                             104.3   107.0    87.3
Equity ratio, %                                             41.1    40.5    43.8
Number of shares, undiluted, weighted                     72 049  72 049  72 049
 average, 1 000 pc                                                              
Return on capital employed,                                  1.3     4.0     3.4
rolling 12 months                                                               
Personnel, average                        14 866  14 977  14 584  14 903  14 963


This company announcement is a summary of the Stockmann's Interim Report for 1
January - 30 June 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 13 August 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 13 August 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:

OVK Q2 2014 ENG.pdf