2015-10-28 07:00:00 CET
2015-10-28 07:00:04 CET
REGLERAD INFORMATION
Stockmann - Interim report (Q1 and Q3)
Stockmann Group's Interim Report 1 January - 30 September 2015
New steps taken in strategy implementation, further slight improvement of
operating result
Helsinki, Finland, 2015-10-28 07:00 CET (GLOBE NEWSWIRE) -- STOCKMANN plc,
Interim Report 28.10.2015 at 8:00 EET
July-September 2015:
Consolidated revenue was EUR 350.9 million (EUR 405.0 million), down 2.9 per
cent at comparable exchange rates excluding Seppälä.
Gross margin was up, to 50.1 per cent (49.6 per cent).
Operating result excluding non-recurring items (NRI) was EUR -12.7 million (EUR
-14.8 million).
January-September 2015:
Consolidated revenue was EUR 1 137.1 million (EUR 1 295.9 million), down 3.6
per cent at comparable exchange rates excluding Seppälä.
Operating result excluding NRI was EUR -56.9 million (EUR -55.1 million).
Result for the period excluding NRI was EUR -71.6 million (EUR -61.7 million).
Earnings per share excluding NRI came to EUR -0.99 (EUR -0.86).
Non-recurring items were EUR -13.0 million (EUR 0 million).
The outlook for 2015 remains unchanged: Due to planned structural changes,
Stockmann expects the Group's revenue in 2015 to be down on 2014. The operating
result excluding non-recurring items is expected to improve, but to remain
negative in 2015 due to the performance of the Stockmann Retail division.
Operating results for the Real Estate and Fashion Chains divisions are expected
to be positive.
CEO Per Thelin:
Implementation of our new strategy is proceeding according to plan. Many
changes have taken place and they have required a lot of work from all
Stockmann employees. There are still many steps ahead of us, as we are just at
the beginning of the process of building a new Stockmann. However, the
direction is clear, and we are moving purposefully towards our goal.
Stockmann wants to ensure inspiration, quality and convenient shopping for its
customers. We are renewing our product offering in the department stores, with
focus on creating a more up-to-date brand mix in our key product areas. We want
to bring new experiences to our customers, and the Brooklyn campaign in
September was a successful example of this. An attractive tenant mix will
complement Stockmann's own offering, and together with our tenants we share the
common goal of providing top-notch shopping experiences to our customers.
During the third quarter we completed the sale of the Academic Bookstore to
Bonnier Books as planned. Books will remain in the offering for customers, as
the Academic Bookstore will continue as a tenant in most of our Finnish
department stores. Euronics opened its electronics stores in the Riga and
Tallinn department stores in September. The cooperation has started well, and
the new tenant expands our offering, as electronics have not been sold earlier
in our Baltic department stores.
Despite the tough market environment and weak Russian rouble, Stockmann's
operating result excluding non-recurring items improved slightly in the third
quarter, and operating result before depreciation was already positive.
Particularly Lindex made a strong improvement in its result thanks to increased
sales and tight cost control. The Real Estate division continued its good
performance. Stockmann Retail's operating result was still negative, despite a
decline in operating costs. We are heading towards the most important season in
the retail business, the Christmas season, and we will put all our effort in
achieving our goals.
Key figures
7-9/ 7-9/ 1-9/ 1-9/ 1-12/ 2015 2014 2015 2014 2014
Revenue, EUR mill. 350.9 405.0 1 1 1 844.5
137.1 295.9
Gross margin, per cent 50.1 49.6 48.8 47.8 46.6
Operating result before depreciation 4.5 2.4 -8.2 -1.5 -11.3
(EBITDA), EUR mill.
Operating result*, EUR mill. -16.0 -14.8 -69.9 -55.1 -82.2
Operating result* excluding -12.7 -14.8 -56.9 -55.1 -42.9
non-recurring items, EUR mill.
Net financial costs, EUR mill. 5.7 4.7 15.7 17.4 21.4
Result before tax, EUR mill. -21.6 -19.5 -85.7 -72.6 -103.6
Result for the period, EUR mill. -16.5 -13.6 -84.6 -61.7 -99.8
Earnings per share, undiluted, EUR -0.23 -0.19 -1.17 -0.86 -1.39
Equity per share, EUR 14.19 11.14 10.55
Cash flow from operating activities, -31.8 -51.9 -79.8 -87.3 29.6
EUR mill.
Capital expenditure, EUR mill. 10.8 15.4 37.0 42.7 53.8
Net gearing, per cent 89.9 114.3 105.4
Equity ratio, per cent 43.8 39.0 39.3
Number of shares, undiluted, weighted 72 049 72 049 72 049
average, 1 000 pc
Return on capital employed, -5.2 -0.3 -4.9
rolling 12 months, per cent
Personnel, average 13 008 14 344 13 258 14 504 14 533
* Operating result is not comparable since the figures for 2014 do not include
the increased depreciation due to a change in the valuation of the real estate
properties.
Strategy process
Stockmann is continuing to pursue the comprehensive turnaround of its business
in accordance with the strategic direction set in late 2014. As of 1 January
2015, the company has been divided into three segments: Stockmann Retail, Real
Estate and Fashion Chains.
Stockmann Retail currently consists of the Stockmann department stores and
Hobby Hall, together with their online stores. The future product selection of
the Stockmann department stores and the online store will focus on fashion,
cosmetics, food and home products. This offering is complemented by an
attractive range of goods and services from tenants. The goal shared by
Stockmann's own retail operations and its tenants is to provide a top-notch
shopping experience to Stockmann's customers.
Stockmann strongly focuses on omnicommerce and is investing in digital
solutions. In September, Stockmann released the first version of its own mobile
application designed to make shopping easier at Stockmann's department stores.
The development of the app will continue and new functionalities will be
introduced to it in stages. Stockmann has also developed a tablet tool for the
sales staff, and this will be introduced in all the Finnish department stores
during autumn 2015. Furthermore, the digital fitting room piloted in the spring
at the Helsinki city centre department store will be expanded to the other
Finnish department stores by the end of the year.
Stockmann has withdrawn from offering its own electronics and book selections.
Expert has opened electronics stores in the Stockmann department stores in
Helsinki city centre, Turku and Tampere, and Euronics has opened electronics
stores in the Tallinn and Riga department stores. The sale of the Academic
Bookstore business to the Swedish media company Bonnier Books AB was completed
on 30 September 2015. Bonnier continues to operate the Academic Bookstore
business in Stockmann's department store premises in six locations in Finland.
Due to the transaction, Stockmann recorded a non-recurring item of EUR -3.2
million related to inventories and non-current assets for the third quarter of
2015. The book inventories on the closing date were higher than earlier
estimated.
Stockmann will withdraw from offering its own toy and pet supplies selections
during the last quarter of 2015. In Helsinki's flagship premises, Hamleys, the
oldest toy shop in the world, will open its store in November 2015. Another new
tenant in the Helsinki flagship will be the pet supplies store Musti ja Mirri.
Both Hamleys and Musti ja Mirri are looking into cooperation possibilities with
Stockmann in other department stores in Finland from 2016 onwards. Stockmann's
own sports selection will be complemented by the Halti outdoor store at the
Helsinki flagship store as of November. Stockmann has reduced its own sports
equipment selection but will continue offering sports clothing and footwear in
all of its stores.
As an important part of the turnaround, Stockmann launched an efficiency
programme in February 2015 with an annual cost savings target of EUR 50
million. During the third quarter, improving cooperation with suppliers,
reviewing the brand mix, and renegotiating terms and conditions with the key
suppliers have continued to be major focus areas. The first effects of the
supplier review are already visible in the inventories, which have declined by
over EUR 45 million in Stockmann Retail, compared with the end of September in
2014. The efficiency programme will continue according to plan, and the effects
of the programme will be reflected in Stockmann's performance mainly from 2016
onwards.
Stockmann will open a new distribution centre for Finland and the Baltic
countries in April 2016. The centre will be highly automated, and will serve
the department store and Stockmann online store more efficiently. The current
warehouse operations in four locations in the Helsinki region will be
transferred to the new distribution centre in stages in 2016 and the Baltic
warehouse operations in Riga will be transferred in 2017. Hobby Hall logistics
in Viinikkala and Tammisto will, for the time being, remain as before. Since
the centralised distribution centre will require fewer employees than at
present, Stockmann started codetermination negotiations concerning all
warehouse operations in Finland in February 2014. As a result of the
negotiations, the number of jobs will be reduced by approximately 110, of which
most will be through layoffs. When starting the negotiations, the reduction
need was estimated at a maximum of 220 jobs, or 200 full-time equivalents in
Finland. With the new distribution centre Stockmann is targeting an additional
annual cost saving of approximately EUR 5.5 million compared to 2014, or EUR
3.5 million including the increased depreciation due to the investment in
automation technology. Savings are expected to be achieved in full from 2018
onwards. The cost savings are not included in the efficiency programme's annual
savings target of EUR 50 million.
Risk factors
Stockmann is exposed to risks that arise from the operating environment, risks
related to the company's own operations and financial risks. The general
economic situation is affecting consumers' purchasing behaviour and purchasing
power in all of the Group's market areas. Rapid and unexpected movements in the
markets may influence the behaviour of both the financial actors and consumers.
Uncertainties related to the general economic situation, particularly those
related to consumers' purchasing power, and currency fluctuations are
considered to be the principal risks that will continue to affect Stockmann
during 2015. A weak operating environment may also cause a decline in rental
income from tenants and in the occupancy rate of properties. These may have an
effect on the fair value of the real estate.
The Stockmann Group entities are subject to tax audits which may lead to
reassessment of taxes. In June 2015, Stockmann plc received a tax audit report
proposing an increase in taxable income in Finland. The tax authorities will
make the decision on the matter in due course after Stockmann's reply to the
audit report. The proposed increase would result in a negative effect on
Stockmann's result of approximately EUR 8 million, excluding interest.
Stockmann Sverige AB is currently also undergoing a tax audit process.
According to the preliminary tax audit report, the Swedish tax authorities are
proposing an increase in taxable income for financial year 2013. The proposed
increase would result in a negative effect of approximately EUR 6 million,
excluding interest. Stockmann expects to receive the final tax audit report in
the near future. According to Stockmann's management, the taxes have been paid
correctly in both cases, and no increase in taxable income should be made.
The company does not consider any other material changes to have taken place in
its risk factors presented in the 2014 financial statements.
Outlook for 2015
The Russian rouble has weakened considerably and economic growth in Russia is
expected to remain at a low level in 2015, having a continuously negative
impact on consumers' purchasing power. The weak purchasing power is also
expected to decrease the number of Russian shoppers in Finland and in the
Baltic countries. Sanctions against Russia and their counter-measures continue
to affect the Russian economy during the year. As a consequence, the outlook
for the Russian retail market remains very uncertain.
In Finland, no growth is expected in the retail market in 2015. The demand for
non-food products, in particular, remains uncertain. Purchasing power is
expected to remain low, which will have a negative effect on consumer
purchasing behaviour.
The affordable fashion market in Sweden and the retail market in the Baltic
countries are expected to remain relatively stable. Low consumer confidence
may, however, affect consumers' willingness to make purchases in all market
areas.
Stockmann's strategy aims at improving the Group's long-term competitiveness
and profitability through a comprehensive turnaround of its business. An
efficiency programme was launched in February 2015 with an annual cost savings
target of EUR 50 million. The programme is progressing according to plan, and
its main effects will start to be reflected in Stockmann's performance mainly
from 2016 onwards.
Capital expenditure for 2015 is estimated to be approximately EUR 70 million.
The operating result will be adversely affected by the increase in depreciation
as a result of the fair market valuation of the real estate. Depreciation for
2015 is estimated to total over EUR 80 million.
Due to planned structural changes, Stockmann expects the Group's revenue in
2015 to be down on 2014. The operating result excluding non-recurring items is
expected to improve, but to remain negative in 2015 due to the performance of
the Stockmann Retail division. Operating results for the Real Estate and
Fashion Chains divisions are expected to be positive.
Webcast
CEO Per Thelin and CFO Lauri Veijalainen will host a webcast in English on 28
October 2015, 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
call begins. The presentation can be followed by this linkor on the address
stockmanngroup.com.The recording and presentation material are available on the
company's website after the event.
Finland: +358 9 2310 1619
Sweden: +46 8 5065 3932
United Kingdom: +44 20 3427 1933
Germany: +49 69 2222 10639
Netherlands: +31 20 716 8251
France: +33 1 76 77 22 41
United States of America: +1646 254 3370
Confirmation code: 3540099
Further information:
Per Thelin, CEO, tel. +358 9 121 5542
Lauri Veijalainen, CFO, tel. +358 9 121 5062
Nora Malin, Director, Corporate Communications, tel. +358 9 121 3558
www.stockmanngroup.com
STOCKMANN plc
Per Thelin
CEO
Distribution:
Nasdaq Helsinki
Principal media
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