THIRD-QUARTER EARNINGS IMPROVE MARKEDLY ON LAST YEAR
In January-September, the Stockmann Group's sales from continuing
operations grew by 8 per cent to EUR 1 089.5 million. Third-quarter
operating profit from continuing operations improved markedly on last year
and was EUR 32.1 million (EUR 19.8 million). Profit before taxes from
continuing operations for the entire report period was EUR 52.9 million
(EUR 49.3 million). Stockmann is making a public tender offer for the
shares in Lindex, one of Northern Europe's largest fashion chains.
Earnings per share were EUR 0.72. The earnings estimate for 2007 is
unchanged. The objective is to post higher operating profit from
continuing operations in 2007 than in 2006.
Key figures
1-9/2007 1-9/2006 2006
Continuing operations
Sales EUR mill. 1 089.5 1 013.3 1 477.8
Revenue EUR mill. 914.3 850.0 1 239.6
Operating profit EUR mill. 54.3 49.4 99.9
Profit before taxes EUR mill. 52.9 49.3 99.4
Earnings per share EUR 0.72 0.69 1.39
Group total
Equity per share EUR 9.77 9.54 10.34
Cash flow from operating EUR mill. 21.8 32.8 117.4
activities
Gearing per cent 17.8 7.2 -6.3
Equity ratio per cent 65.9 71.7 74.5
Weighted average number of thousands 55 566 54 208 54 310
shares
Return on capital employed, per cent 17.2 24.6 22.9
rolling 12 months
Financial reporting
Stockmann adopted International Financial Reporting Standards (IFRS) on
January 1, 2005. The Interim Report has been prepared in accordance with
IAS 34 and the accounting policies and calculation methods used are the
same as those applied in the 2006 financial statements. In the financial
reporting for 2006, Stockmann Auto and the Zara business in Russia are
treated as discontinued operations in accordance with IFRS 5. The figures
are unaudited.
Tender offer for Lindex shares
Stockmann and AB Lindex (publ), a Swedish company listed on OMX Nordic
Exchange Stockholm AB, entered into an agreement on September 30, 2007,
whereby Stockmann or a wholly-owned subsidiary of it will make a public
tender offer, recommended by Lindex's Board of Directors, for all of
Lindex's issued shares. Lindex is one of Northern Europe's largest fashion
chains. It has good profitability and a strong market position,
particularly in Sweden, Norway and Finland. Lindex is in a similar
strategic position to Stockmann, because both companies are seeking to
achieve a large part of their growth outside their domestic markets.
Lindex has more than 350 stores in Sweden, Norway, Finland, Estonia,
Latvia, Lithuania and the Czech Republic. Lindex's product areas are
ladies' lingerie, ladies' wear, children's wear and cosmetics. Lindex had
revenue for the financial year ended August 31, 2007 of EUR 572.5 million,
and it posted operating profit of EUR 51.5 million.
Stockmann is offering Lindex shareholders SEK 116 in cash for each share
in Lindex. The value of the tender offer is about EUR 866 million in
total.
The offer period will commence on October 29, 2007 and end on November 30,
2007. The complete terms and conditions of the offer are set out in the
offer document, which Stockmann will publish in connection with the tender
offer on October 26, 2007.
Stockmann has secured financing for the acquisition through a loan
agreement it has concluded with certain banks. In order to refinance part
of the loan financing, Stockmann's Board of Directors is considering
undertaking measures to increase the company's equity with the purpose of
maintaining Stockmann's equity ratio at a level of at least 40-50 per
cent.
Sales and result
Consolidated operating profit from continuing operations in the third
quarter improved markedly on the previous year and was EUR 32.1 million
(EUR 19.8 million). All the operating units improved their operating
profit in the third quarter.
Operating profit from continuing operations for the report period grew by
EUR 4.9 million to EUR 54.3 million (EUR 49.4 million). Non-recurring
capital gains booked in the report period amounted to EUR 9.7 million, as
against EUR 4.7 million in the same period a year earlier. Stripping out
the non-recurring items, earnings improved in Finland and the Baltic
countries. Consolidated earnings were burdened by the costs of starting up
a new department store in Moscow as well as by the energetic establishment
of new Bestseller stores and Seppälä stores in Russia. A major upgrade of
Hobby Hall's information systems resulted in a change in the way sales are
recorded, leading to a weakening in sales and earnings by deferring the
recording of part of sales.
The Stockmann Group's sales from continuing operations grew to EUR 1 089.5
million, up 8 per cent. Not eliminating the sales by Stockmann Auto, which
was divested in the comparative period, the Group's sales were at the
previous year's level. The Group's sales abroad amounted to EUR 295.7
million, an increase of 22 per cent. Sales from continuing operations in
Finland grew by 3.0 per cent to EUR 793.8 million. International
operations accounted for an increased share of consolidated sales, rising
from 24 per cent to 27 per cent. Revenue was EUR 914.3 million, as against
EUR 911.0 million in the comparative period. Other operating income
amounted to EUR 9.7 million. In the comparative period, other operating
income amounted to EUR 34.0 million, consisting mainly of capital gains on
the transfer of operations.
The Group's gross operating margin grew by EUR 25.8 million to EUR 378.8
million. The relative gross margin was 41.4 per cent (38.7 per cent). The
relative gross margin on operations of the Department Store Division and
Seppälä improved, whereas Hobby Hall's relative gross margin was at the
previous year's level. For the Group as a whole, the relative gross margin
was improved by the discontinuance of low-margin vehicle sales as from the
beginning of March 2006. Operating expenses increased by EUR 24.0 million
and depreciation by EUR 2.2 million. Primarily owing to the impact of the
EUR 34.0 million of other operating income during the comparative period,
consolidated operating profit was down by EUR 24.7 million to EUR 54.3
million. Net financial expenses grew by EUR 1.4 million and were EUR 1.5
million (EUR 0.1 million).
Profit before taxes was EUR 52.9 million, down EUR 26.0 million on the
figure a year earlier. Direct taxes were EUR 13.1 million, an increase of
EUR 1.1 million on the previous year. In the comparative period, earnings
included EUR 29.3 million of tax-free capital gains. Third-quarter net
profit was EUR 23.5 million, compared with EUR 15.4 million a year
earlier.
Earnings per share in the report period were EUR 0.72 (EUR 1.23) and
diluted for options, earnings were EUR 0.71 (EUR 1.22). Equity per share
was EUR 9.77 (EUR 9.54).
Sales and earnings trend by business segment
The Department Store Division's sales grew by 8 per cent to EUR 817.7
million. Sales in Finland were up 4 per cent. International Operations'
sales were increased by the good like-for-like retail performance by the
department stores in Russia and the Baltic countries, a fourth department
store that was opened in Moscow in mid-February as well as the new
Bestseller stores. In Russia, the problems encountered in imports in the
early months of the year led to a temporary shortfall of merchandise,
slowing sales growth. The department stores in Estonia and Latvia reported
an excellent sales trend. Sales by International Operations grew by 19 per
cent and its share of the division's sales rose to 28 per cent (26 per
cent). The relative gross margin improved in the report period. The
Department Store Division's operating profit was EUR 44.9 million (EUR
35.2 million). Non-recurring capital gains of EUR 9.7 million were
included in the result for the period, as against EUR 4.7 million in the
comparative period. Earnings generated by the businesses in Finland and
the Baltic countries were on a positive trend in the report period.
Earnings from International Operations were burdened by the department
store that was opened in Moscow in February and the start-up costs of the
new Bestseller and Nike stores and the larger-than-normal discounts in the
second quarter due to delays in customs clearance at the start of the
year. The division's operating profit improved substantially and was EUR
25.7 million in the third quarter (EUR 13.1 million). The Department
Store Division's full-year operating profit is estimated be better than it
was a year ago.
Hobby Hall reported sales growth of 2 per cent to EUR 147.5 million (EUR
144.3 million). Sales increased in the Baltic countries, and in Finland
they remained at the same level as in the previous year. Hobby Hall's
relative gross margin was at the level of a year earlier. Online sales
continued to grow strongly, accounting for 60 per cent of Hobby Hall's
distance retailing in Finland (47 per cent). Online sales also grew in
Estonia, accounting for 33 per cent of Hobby Hall's distance retailing in
Estonia (32 per cent). Hobby Hall placed a new information system in
operation in April. Earnings in the report period were burdened by the non-
recurring costs of the commissioning and the resultant partial delay in
recording sales. After the start-up phase, the new information system will
enhance Hobby Hall's operations and reporting. Hobby Hall's operating
profit in the report period was EUR 3.0 million (EUR 3.7 million). Third-
quarter operating profit improved and was EUR 2.5 million (EUR 2.1
million). Full-year operating profit is estimated to be somewhat smaller
than a year ago owing to the start-up costs for operations in Russia.
Seppälä's sales increased by 10 per cent on the same period of last year
and were EUR 123.6 million. Sales grew strongly in Russia and the Baltic
countries, where they were boosted by the new stores that were opened
towards the end of 2006 and at the beginning of 2007 as well as by the
good like-for-like sales trend. Sales abroad grew by 50 per cent and their
share of Seppälä's total sales rose to 29 per cent (21 per cent). The
relative gross margin improved, but fixed costs and depreciation also
increased because of the heavy investments in opening new stores,
especially in Russia. Seppälä's operating profit in the report period was
EUR 12.1 million (EUR 13.8 million). Third-quarter operating profit
amounted to EUR 5.5 million (EUR 5.4 million). Full-year operating profit
is estimated to be at the previous year's level.
Financing and capital employed
Liquid assets totalled EUR 21.2 million at the end of September, as
against EUR 17.0 million a year earlier and EUR 59.2 million at the end of
2006.
Interest-bearing liabilities at the end of September were EUR 118.3
million (EUR 54.1 million), of which EUR 30.2 million consisted of long-
term borrowings (EUR 23.4 million). EUR 20.0 million of new long-term
borrowings were drawn down during the report period. Capital expenditures
amounted to EUR 89.1 million. Net working capital amounted to EUR 238.0
million at the end of September, as against EUR 239.5 million a year
earlier and EUR 194.5 million at the end of 2006. Dividend payouts
totalled EUR 72.1 million. Subscriptions made by exercising the share
options for the year 2000 added EUR 3.1 million to shareholders' equity.
The equity ratio was 65.9 per cent (71.7 per cent) at the end of
September. The equity ratio at the end of 2006 was 74.5 per cent. Gearing
was 17.8 per cent at the end of September (7.2 per cent). At the end of
2006, gearing was 6.3 per cent negative.
The return on capital employed over the past 12 months was 17.2 per cent
(22.9 per cent at the end of 2006). The Group's capital employed increased
by EUR 89.1 million from September of the previous year and stood at EUR
662.4 million towards the end of the report period (EUR 595.0 million at
the end of 2006).
Capital expenditures and current projects
Capital expenditures during the report period totalled EUR 89.1 million
(EUR 90.1 million).
The construction works for the major enlargement and transformation
project for the department store in the centre of Helsinki are continuing.
The project involves expanding the department store's commercial premises
by about 10 000 square metres by converting existing premises to
commercial use and by building new retail space. In addition, completely
new goods handling, servicing and customer parking areas will be built.
After the enlargement the Helsinki department store will have a total of
about 50 000 square metres of retail space. The cost estimate for the
enlargement is about EUR 145 million. The works will be carried out stage
by stage and are estimated to reach completion in 2010. The spaces that
were temporarily not available for retail sales whilst the construction
works were under way have again been placed in use, and the department
store's retail space is now the same as it was before the project started.
Henceforth, new retail space will be placed in use stage by stage. During
the report period, the project required an investment of about EUR 35.5
million. Stockmann has succeeded in carrying out the extensive project
without disrupting the department store's profitability. The department
store's sales increased during the report period.
A new Stockmann Beauty store was opened in Joensuu in February. Towards
the end of the year, stores will be opened in Rovaniemi and Lappeenranta.
Thereafter, there will be sixteen stores in the Stockmann Beauty chain.
In February 2007, the Department Store Division opened a fourth department
store in Moscow, in the Mega Shopping Centre on the south-east side of
town. The department store has over 10 000 square metres of retail space.
Stockmann's portion of the total costs of the department store, which was
built in leased premises, was EUR 16.5 million, of which EUR 5.8 million
was an outlay in the report period. Operations have started up according
to plan.
Five new Bestseller stores were opened in Russia in the report period: two
in St Petersburg and one store each in Moscow, Kazan and Samara. Stockmann
now has a total of 16 Bestseller stores in Russia. Later this year, new
stores will be opened in Rostov-on-Don and Novosibirsk.
The first two Stockmann Nike stores were opened in St Petersburg in
February, and a store was opened in Nizhny Novgorod at the beginning of
October. Stores will be opened in Novosibirsk and Rostov-on-Don towards
the end of the year.
In 2006, Stockmann purchased a 10 000-odd square metre commercial plot on
Nevsky Prospect, St Petersburg's high street. The plot is located next to
the Vosstaniya Square underground station, in the immediate vicinity of
Moscow Station. On this plot, Stockmann will erect the Nevsky Centre
shopping centre that will have about 100 000 square metres of gross floor
space, of which about 50 000 square metres will be store and office space.
A full-scale Stockmann department store with about 20 000 square metres of
retail space has been planned for the shopping centre, along with other
retail stores, office premises and an underground car park. The investment
outlay for the department store and shopping centre has grown in step with
a rise in construction costs, delay of the project and a change in the
structure of the contract agreement. The total investment is estimated to
be about EUR 170 million. The foundation works for the building are under
way. Stockmann's objective is to open the department store and commercial
centre by the end of 2009. During the report period, the project required
an investment of about EUR 19.7 million.
Stockmann has signed a preliminary agreement on opening Moscow's fifth
Stockmann department store in leased premises in the Metropolis Shopping
Centre that is being built right near the city's centre. The department
store will have a total of about 8 000 square metres of floor space, and
Stockmann's investment in the project will be about EUR 12 million. The
objective is to open the department store in autumn 2008.
Stockmann has also made an agreement on the opening of a full-scale
department store in leased premises located in a shopping centre that is
currently being built in Ekaterinburg, Russia. The department store will
have a total of over 8 000 square metres of floor space, and Stockmann's
investment in the project will be about EUR 12 million. Plans call for
opening the department store by summer 2009.
The Department Store Division's capital expenditures totalled EUR 78.4
million.
Hobby Hall's capital expenditures amounted to EUR 2.0 million, which went
mainly for the upgrade of the information system. Hobby Hall launched
distance retailing in Lithuania in February and will carry out a similar
launch in Russia towards the end of the year. Hobby Hall is also starting
up online sales in Sweden during 2008.
Seppälä's capital expenditures came to EUR 7.6 million. In the report
period, Seppälä opened a store in Tampere, Finland; Pärnu, Estonia, and
Vilnius, Lithuania. By mid-October, Seppälä has opened nine stores in
Russia: four in St Petersburg as well as one in Moscow, Samara, Nizhny
Novgorod, Yaroslavl and Voronezh. Before the year ends, it is Seppälä's
objective to open one more store in Finland, two in Lithuania and two in
Russia, in Rostov-on-Don and in Novosibirsk. In Finland and Estonia, a
total of 11 stores were refurbished, some of them having moved into new
premises. During 2007, an upgrade of the cash register system was carried
out at the stores in Finland and Estonia, and it was completed in October.
Operations in Ukraine are scheduled to start up in 2008.
Other capital expenditures in the report period amounted to EUR 1.1
million.
On September 27, 2007, Stockmann made an agreement with Nordea on
transferring its financing of Loyal Customer accounts to Nordea. The
consideration paid for the transfer under the agreement contributed to
improving Stockmann's third-quarter earnings. This transfer of accounts
will lighten Stockmann's balance sheet in 2008 by about EUR 65 million.
Ten employees who handle Loyal Customer accounts will transfer to Nordea's
employ under their current terms of employment. The credit facilities of
Stockmann's credit line Loyal Customer Cards will converge with those of
the international MasterCard during 2008 in Finland, Estonia and Latvia,
where Stockmann has previously not offered Loyal Customer Card with a
credit facility.
In respect of Russia, Stockmann, acting in co-operation with Citibank,
has agreed on bringing to market a MasterCard Loyal Customer Card
with a credit facility in spring 2008.
Shares and share capital
The company's market capitalization at the end of September was EUR 1
894.5 million (EUR 1 803.9 million). At the end of 2006 the market
capitalization was EUR 2 028.6 million.
Stockmann's share prices underperformed both the OMX Helsinki index and
the OMX Helsinki Cap index during the report period. At the end of
September the stock exchange price of the Series A share was EUR 33.70,
compared with EUR 36.40 at the end of 2006, and the Series B share was
selling at EUR 33.83, as against EUR 36.48 at the end of 2006.
The 192 865 Stockmann shares subscribed for in December 2006 with the
share options for the year 2000 were entered in the Trade Register on
February 28, 2007, and they were admitted to public trading on the
Helsinki Stock Exchange together with existing shares on March 1, 2007.
Share options for 2000 were exercised in March to subscribe for 238 709
shares. Of these, 18 000 shares were entered in the Trade Register on
April 10, 2007, and 220 709 shares on May 14, 2007. They were accepted for
public trading on the Helsinki Stock Exchange together with the old shares
on April 11, 2007 and May 15, 2007. As a consequence of the subscriptions
the share capital was increased by EUR 477 418. Following the increase,
the share capital was EUR 112 187 224.
A total of 2 500 000 new Series B shares were eligible for subscription on
the basis of the share options for 2000. During the subscription period, a
total of 2 499 800 Stockmann Series B shares were subscribed for with the
share options. The subscription period ended on April 1, 2007.
At September 30, 2007, Stockmann had 24 564 243 Series A shares and 31 529
369 Series B shares.
Stockmann held 369 560 of its own Series B shares (treasury shares) at the
end of September 2007. They comprised 0.7 per cent of all the shares
outstanding and 0.1 per cent of all the votes. The shares were bought back
at a total price of EUR 5.6 million.
The Annual General Meeting in 2007 authorized the Board of Directors to
decide on the transfer of the company's own Series B shares in one or more
instalments. The authorization will be valid for five years. The company's
Board of Directors does not have valid authorizations to increase the
share capital, to float issues of convertible bonds or bonds with
warrants, or to buy back its own shares.
Personnel strength
During the report period the Stockmann Group had an average payroll of 10
525 employees, or 628 more than in the comparative period. The number of
employees was raised by the department stores and other stores in Russia
and the Baltic countries, but lowered by the disposal of Stockmann Auto at
the beginning of March 2006. Stockmann's average number of employees,
converted to full-time staff, increased by 564 and was 8 519.
At the end of September 2007 the number of staff working abroad was 4 004
employees. At the end of September of last year Stockmann had 3 155 people
working abroad. Their proportion of the total personnel was 38 per cent
(33 per cent).
Full-year outlook
Major changes have not occurred in the operating environment, nor have
operational risks changed materially from what was stated in the Annual
Report.
If the above-mentioned tender offer for Lindex leads to Stockmann's
gaining of control of the company before the end of the financial year,
this will result in a weakening of the Group's equity ratio at the balance
sheet date. In this case, Lindex's earnings for the time of Stockmann's
ownership will be consolidated in proportion to the Group's ownership
stake.
Retail sales are estimated to increase by 3-4 per cent in Finland in 2007.
The markets in Russia and the Baltic countries are set to continue growing
faster than the Finnish market. Stockmann's sales are estimated to be just
over EUR 1.6 billion.
The result from continuing operations for the last quarter of 2007 is
estimated to improve on the figure a year earlier.
Earnings in 2006 included substantial non-recurring items as a consequence
of the disposal of businesses. In 2007, these will be markedly smaller
than in the previous year. The Group is carrying out a number of major
investments. The result for 2007 is burdened by the start-up costs of the
investments that will become operational during the year. Because of the
decrease in non-recurring items, the Group's profit before taxes will
come in lower than in 2006. Notwithstanding this, the objective is to
post higher operating profit from continuing operations than in 2006.
Balance sheet, Group EUR millions 30.9.07 30.9.06 31.12.06
ASSETS
Non-current assets
Intangible assets 10.7 5.5 6.3
Property, plant and equipment 409.7 328.8 352.2
Available-for-sale investments 6.6 6.1 6.5
Deferred tax assets 2.5 3.4 2.5
Non-current assets, total 429.5 343.9 367.5
Current assets
Inventories 202.7 182.9 155.0
Receivables, interest-bearing 97.2 104.8 98.9
Receivables, non interest-bearing 75.4 75.6 87.0
Cash and cash equivalents 21.2 17.0 59.2
Current assets, total 396.5 380.3 400.1
Assets, total 826.0 724.2 767.6
EQUITY AND LIABILITIES
Equity 544.2 519.2 571.6
Minority interest 0.0 0.0 0.0
Equity, total 544.2 519.2 571.6
Non-current liabilities, interest-bearing 30.2 23.4 23.4
Deferred taxes liabilities 26.2 27.0 26.2
Current liabilities
Current liabilities, interest-bearing 88.0 30.7
Current liabilities, non interest-bearing 137.3 123.9 146.4
Current liabilities, total 225.4 154.6 146.4
Equity and liabilities, total 826.0 724.2 767.6
Equity ratio, per cent 65.9 71.7 74.5
Gearing, per cent 17.8 7.2 -6.3
Cash flow from operations per share, EUR 0.39 0.61 2.15
Interest-bearing net debt, EUR mill. -0.1 -67.7 -134.7
Number of shares at September 30, 56 094 54 804 55 662
thousands
Weighted average number of shares, 55 566 54 208 54 310
thousands
Weighted average number of shares, 55 790 55 053 55 178
diluted, thousands
Market capitalization, EUR mill. 1 894.5 1 803.9 2 028.6
Equity ratio, per cent = 100 x (Equity + minority interest) / Total assets
less advance payments received
Gearing, per cent = 100 x Interest-bearing liabilities less cash and cash
equivalents / Equity total
Interest-bearing net debt = Interest-bearing liabilities less cash and
cash equivalents less interest-bearing liabilities
Market capitalization, EUR mill. = Number of shares multiplied by the
quotation for the respective share series on the balance sheet date
Cash flow statement, Group EUR millions 1-9/2007 1-9/2006 1-12/2006
Cash flows from operating activities
Net profit for the financial year 39.8 66.9 104.7
Adjustments:
Deprecation 26.4 24.2 32.1
Profit (-) and loss (+) from sales -34.0 -34.4
of non-current assets
Financial expenses 2.5 1.7 2.3
Financial income -1.0 -1.6 -1.8
Taxes paid 13.1 12.0 24.3
Other adjustments 1.8 1.7
Changes in working capital:
Change in trade and other receivables 17.5 -11.2 1.7
Change in inventories -47.7 -0.1 5.2
Change in trade payables and other -11.9 -4.3 11.2
liabilities
Interest paid -1.7 -1.7 -2.5
Interest received 0.8 1.8 1.1
Taxes paid -17.8 -20.9 -28.2
Net cash from operating activities 21.8 32.8 117.4
Cash flows from investing activities
Investments in tangible and intangible -88.5 -90.7 -112.2
assets
Acquisition of subsidiary net cash -12.7
acquired
Disposal of subsidiaries less cash at 101.7 105.0
date of disposal
Capital expenditures on other investments -0.1 -0.5
Cash from tangible assets 8.4
Cash from other investments 0.8 0.9
Dividends received 0.1 0.1 0.1
Net cash used in investing activities -88.4 11.8 -11.0
Cash flows from financing activities
Proceeds from issue of share capital 5.8 5.8 17.2
Change in short-term loans, increase (+), 74.9 -2.5 -33.3
decrease (-)
Long-term loans, increase (+), decrease (- 20.0 10.0 10.0
)
Dividends paid -72.1 -59.3 -59.5
Net cash used in financing activities 28.6 -46.0 -65.6
Change in cash and cash equivalents -37.9 -1.4 40.8
Cash and cash equivalents at start of the 59.2 18.4 18.4
period
Cash and cash equivalents at end of the 21.2 17.0 59.2
period
Income statement, 1-9/2007
Group, EUR millions Continuing Discontinued Total
operations operations
Revenue 914.3 914.3
Other operating income 9.7 9.7
Materials and consumables -535.4 -535.4
Wages, salaries and employee benefits -150.9 -150.9
expenses
Depreciation -26.4 -26.4
Other operating expenses -156.9 -156.9
Operating profit 54.3 54.3
Finance income and expenses -1.5 -1.5
Profit before tax 52.9 52.9
Income taxes -13.1 -13.1
Profit for the period 39.8 39.8
Earnings per share, EUR 0.72 0.72
Earnings per share, diluted, EUR 0.71 0.71
Operating profit, per cent 5.9 5.9
Equity per share, EUR 9.77
Return on equity, per cent, moving 12 14.6
months
Return on capital employed, per cent, 17.2
moving 12 months
Average number of employees, converted 8 519 8 519
to full-time staff
Investments 89.1 89.1
Income statement, 1-9/2006
Group, EUR millions Continuing Discontinued Total
operations operations
Revenue 850.0 61.1 911.0
Other operating income 4.7 29.3 34.0
Materials and consumables -505.5 -52.5 -558.0
Wages, salaries and employee -141.4 -5.4 -146.8
benefits expenses
Depreciation -23.9 -0.3 -24.2
Other operating expenses -134.4 -2.6 -137.0
Operating profit 49.4 29.6 79.0
Finance income and expenses -0.1 0.0 -0.1
Profit before tax 49.3 29.6 78.9
Income taxes -11.9 -0.1 -12.0
Profit for the period 37.4 29.5 66.9
Earnings per share, EUR 0.69 0.54 1.23
Earnings per share, diluted, EUR 0.68 0.54 1.22
Operating profit, per cent 5.8 48.4 8.7
Equity per share, EUR 9.54
Return on equity, per cent, moving 22.4
12 months
Return on capital employed, per 24.6
cent, moving 12 months
Average number of employees, 7 803 152 7 955
converted to full-time staff
Investments 90.1 90.1
Income statement, 1-12/2006
Group, EUR millions Continuing Discontinued Total
operations operations
Revenue 1 239.6 61.1 1 300.7
Other operating income 5.1 29.3 34.4
Materials and consumables -721.1 -52.5 -773.6
Wages, salaries and employee -199.3 -5.4 -204.7
benefits expenses
Depreciation -31.8 -0.3 -32.1
Other operating expenses -192.6 -2.6 -195.1
Operating profit 99.9 29.6 129.5
Finance income and expenses -0.5 0.0 -0.6
Profit before tax 99.4 29.6 128.9
Income taxes -24.2 -0.1 -24.3
Profit for the period 75.2 29.5 104.7
Earnings per share, EUR 1.39 0.54 1.93
Earnings per share, diluted, EUR 1.37 0.53 1.90
Operating profit, per cent 8.1 48.4 10.0
Equity per share, EUR 10.34
Return on equity, per cent, moving 19.4
12 months
Return on capital employed, per 22.9
cent, moving 12 months
Average number of employees, 7 923 114 8 037
converted to full-time staff
Investments 125.5 125.5
Earnings per share, EUR = (Profit before taxes - minority interest -
income taxes) / Average number of shares, adjusted for share issues
Return on equity, per cent, moving 12 months = 100 x Profit for the period
(12 months) / (Equity + minority interest) (average over 12 months)
Return on capital employed, per cent, moving 12 months = 100 x (Profit
before taxes + interest and other financial expenses) (12 months) /
Capital employed (average over 12 months)
SEGMENT INFORMATION
Segments
Sales, EUR millions 1-9/2007 1-9/2006 Change 1-12/2006
per cent
Department Store Division 817.7 755.6 8 1 119.0
Hobby Hall 147.5 144.3 2 199.8
Seppälä 123.6 112.8 10 158.1
Shared 0.6 0.7 -8 0.9
Continuing operations, total 1 089.5 1 013.3 8 1 477.8
Discontinued operations 74.8 74.8
Group 1 089.5 1 088.2 0 1 552.6
Revenue, EUR millions 1-9/2007 1-9/2006 Change 1-12/2006
per cent
Department Store Division 688.1 635.7 8 941.3
Hobby Hall 122.5 119.8 2 165.9
Seppälä 102.6 93.3 10 130.8
Shared 1.0 1.1 -10 1.7
Continuing operations, total 914.3 850.0 8 1 239.6
Discontinued operations 61.1 61.1
Group 914.3 911.0 0 1 300.7
Operating profit, EUR 1-9/2007 1-9/2006 Change 1-12/2006
millions per cent
Department Store Division 44.9 35.2 28 79.5
Hobby Hall 3.0 3.7 -18 7.1
Seppälä 12.1 13.8 -12 21.1
Shared -5.1 -4.2 22 -8.0
Eliminations -0.6 0.9 0.2
Continuing operations, total 54.3 49.4 10 99.9
Discontinued operations 29.6 29.6
Group 54.3 78.9 -31 129.5
Investments,
gross, EUR millions 30.9.07 30.9.06 Change 31.12.06
per cent
Department Store Division 78.4 84.4 -7 115.3
Hobby Hall 2.0 2.3 -14 3.2
Seppälä 7.6 2.5 207 6.1
Shared 1.1 0.9 22 0.9
Continuing operations, total 89.1 90.1 -1 125.5
Discontinued operations
Group 89.1 90.1 -1 125.5
Assets, EUR millions 30.9.07 30.9.06 Change 31.12.06
per cent
Department Store Division 641.2 481.9 33 557.9
Hobby Hall 108.1 107.0 1 104.0
Seppälä 40.0 31.7 26 38.0
Shared 36.8 103.6 -64 67.7
Continuing operations, total 826.0 724.2 14 767.6
Discontinued operations
Group 826.0 724.2 14 767.6
Non-interest-bearing 30.9.07 30.9.06 Change 31.12.06
liabilities, EUR millions per cent
Department Store Division 105.2 97.9 7 122.0
Hobby Hall 21.8 17.8 22 13.9
Seppälä 7.3 7.6 -4 10.9
Shared 29.3 27.5 6 25.8
Continuing operations, total 163.6 150.9 8 172.6
Discontinued operations
Group 163.6 150.9 8 172.6
Market areas 1-9/2007
Continuing Discontinued Total
Sales, EUR millions operations operations
Finland 1) 793.8 793.8
Baltic states 2) 133.5 133.5
Russia 3) 162.2 162.2
Group 1 089.5 1 089.5
Finland, per cent 72.9 72.9
International operations, per cent 27.1 27.1
Continuing Discontinued Total
Revenue, EUR millions operations operations
Finland 1) 662.0 662.0
Baltic states 2) 113.5 113.5
Russia 3) 138.7 138.7
Group 914.3 914.3
Finland, per cent 72.4 72.4
International operations, per cent 27.6 27.6
Continuing Discontinued Total
Operating profit, EUR millions operations operations
Finland 1) 53.8 53.8
Baltic states 2) 11.8 11.8
Russia 3) -11.3 -11.3
Group 54.3 54.3
Finland, per cent 99.0 99.0
International operations, per cent 1.0 1.0
Investments, 30.9.2007
gross, EUR millions Continuing Discontinued Total
operations operations
Finland 1) 53.3 53.3
Baltic states 2) 1.5 1.5
Russia 3) 34.3 34.3
Group 89.1 89.1
Finland, per cent 59.8 59.8
International operations, per cent 40.2 40.2
Continuing Discontinued Total
Assets, EUR millions operations operations
Finland 1) 568.4 568.4
Baltic states 2) 74.3 74.3
Russia 3) 183.3 183.3
Group 826.0 826.0
Finland, per cent 68.8 68.8
International operations, per cent 31.2 31.2
1) Department Store Divisions,
Stockmann Auto, Hobby Hall and Seppälä
2) Department Store Divisions,
Stockmann Auto, Hobby Hall and Seppälä
3) Department Store Divisions and
Seppälä
Market areas 1-9/2006
Continuing Discontinued Total
Sales, EUR millions operations operations
Finland 1) 770.7 74.8 845.5
Baltic states 2) 114.2 114.2
Russia 3) 128.5 128.5
Group 1 013.3 74.8 1 088.2
Finland, per cent 76.1 77.7
International operations, per cent 23.9 22.3
Continuing Discontinued Total
Revenue, EUR millions operations operations
Finland 1) 642.8 61.1 703.9
Baltic states 2) 97.1 97.1
Russia 3) 110.1 110.1
Group 850.0 61.1 911.0
Finland, per cent 75.6 77.3
International operations, per cent 24.4 22.7
Continuing Discontinued Total
Operating profit, EUR millions operations operations
Finland 1) 35.5 7.7 43.2
Baltic states 2) 13.4 13.4
Russia 3) 0.6 21.9 22.5
Group 49.4 29.6 79.0
Finland, per cent 71.8 54.7
International operations, per cent 28.2 45.3
Investments, 30.9.2006
gross, EUR millions Continuing Discontinued Total
operations operations
Finland 1) 44.6 44.6
Baltic states 2) 0.8 0.8
Russia 3) 44.7 44.7
Group 90.1 90.1
Finland, per cent 49.5 49.5
International operations, per cent 50.5 50.5
Continuing Discontinued Total
Assets, EUR millions operations operations
Finland 1) 561.9 561.9
Baltic states 2) 71.6 71.6
Russia 3) 90.7 90.7
Group 724.2 724.2
Finland, per cent 77.6 77.6
International operations, per cent 22.4 22.4
1) Department Store Divisions,
Stockmann Auto, Hobby Hall and Seppälä
2) Department Store Divisions,
Stockmann Auto, Hobby Hall and Seppälä
3) Department Store Divisions and
Seppälä
Market areas 1-12/2006
Continuing Discontinued Total
Sales, EUR millions operations operations
Finland 1) 1 123.7 74.8 1 198.6
Baltic states 2) 165.3 165.3
Russia 3) 188.8 188.8
Group 1 477.8 74.8 1 552.6
Finland, per cent 76.0 77.2
International operations, per cent 24.0 22.8
Continuing Discontinued Total
Revenue, EUR millions operations operations
Finland 1) 937.5 61.1 998.5
Baltic states 2) 140.6 140.6
Russia 3) 161.6 161.6
Group 1 239.6 61.1 1 300.7
Finland, per cent 75.6 76.8
International operations, per cent 24.4 23.2
Continuing Discontinued Total
Operating profit, EUR millions operations operations
Finland 1) 75.2 7.7 82.9
Baltic states 2) 21.0 21.0
Russia 3) 3.8 21.9 25.6
Group 99.9 29.6 129.5
Finland, per cent 75.2 64.0
International operations, per cent 24.8 36.0
Investments, 31.12.2006
gross, EUR millions Continuing Discontinued Total
operations operations
Finland 1) 64.0 64.0
Baltic states 2) 1.8 1.8
Russia 3) 59.7 59.7
Group 125.5 125.5
Finland, per cent 51.0 51.0
International operations, per cent 49.0 49.0
Continuing Discontinued Total
Assets, EUR millions operations operations
Finland 1) 594.8 594.8
Baltic states 2) 69.7 69.7
Russia 3) 103.1 103.1
Group 767.6 767.6
Finland, per cent 77.5 77.5
International operations, per cent 22.5 22.5
1) Department Store Divisions,
Stockmann Auto, Hobby Hall and Seppälä
2) Department Store Divisions,
Stockmann Auto, Hobby Hall and Seppälä
3) Department Store Divisions and
Seppälä
Statement of changes Share
in equity premium Legal
Group, EUR millions Equity* fund reserve
Equity December 31, 2005 109.0 166.5 0.2
Options exercised 1.8 3.9
Share bonus 0.2
Transfer to other funds
Dividends
Translation differences
Profit for the period
Equity September 30, 2006 110.8 170.6 0.2
Equity December 31, 2006 111.7 183.4 0.2
Options exercised 0.5 2.6
Share bonus 0.2
Transfer to other funds 0.0
Cost of share issue
Dividends
Translation differences
Profit for the period
Equity September 30, 2007 112.2 186.2 0.2
* including share issue
Statement of changes Trans-
in equity Other lation Retained
Group, EUR millions funds** reserve earnings
Equity December 31, 2005 43.9 0.0 185.7
Options exercised
Share bonus 0.5
Transfer to other funds 0.0
Dividends -59.5
Translation differences 0.0 0.0
Profit for the period 66.9
Equity September 30, 2006 43.9 0.0 193.6
Equity December 31, 2006 43.9 0.0 232.3
Options exercised
Share bonus 0.2
Transfer to other funds
Cost of share issue 1.4
Dividends -72.1
Translation differences 0.0 0.0
Profit for the period 39.8
Equity September 30, 2007 43.9 0.0 201.6
** excluding deferred tax liability
Statement of changes
in equity Minority
Group, EUR millions Total interest Total
Equity December 31, 2005 505.3 0.0 505.3
Options exercised 5.8 5.8
Share bonus 0.7 0.7
Transfer to other funds 0.0 0.0
Dividends -59.5 -59.5
Translation differences 0.0 0.0
Profit for the period 66.9 0.0 66.9
Equity September 30, 2006 519.2 0.0 519.2
Equity December 31, 2006 571.6 0.0 571.6
Options exercised 3.1 3.1
Share bonus 0.4 0.4
Transfer to other funds 0.0 0.0
Cost of share issue 1.4 1.4
Dividends -72.1 -72.1
Translation differences 0.0 0.0
Profit for the period 39.8 0.0 39.8
Equity September 30, 2007 544.2 0.0 544.2
Contingent liabilities, 30.9.07 30.9.06 31.12.06
Group EUR millions
Mortgages on land and 1.7 1.7 1.7
buildings
Guarantees 0.1 1.5
Pledges 0.1 0.1
Total 1.8 1.7 3.2
Lease agreements on business
premises, EUR millions
Minimum rents payable on the
basis of binding lease
agreements on business
premises
Within one year 67.7 63.9 69.6
After one year 323.4 329.2 351.5
Total 391.1 393.0 421.1
Lease payments
Within one year 1.0 1.1 1.1
After one year 1.0 0.9 0.9
Total 2.1 2.0 2.0
Derivative instruments
Nominal value
Interest rate derivatives 5.3
Exchange rates
Country Currency 30.9.07 30.9.06 31.12.06
Russia RUB 35.3490 33.9420 34.6800
Estonia EEK 15.6466 15.6466 15.6466
Latvia LVL 0.7038 0.6960 0.6972
Lithuania LTL 3.4528 3.4528 3.4528
Sweden SEK 9.2147 9.2797 9.0404
Income statement
quarterly, Q3 Q2 Q1 Q4
Group, EUR millions 2007 2007 2007 2006
Continuing operations
Revenue 308.6 294.2 311.4 389.6
Other operating income 9.7 0.4
Materials and consumables -179.8 -164.0 -191.6 -215.6
Wages, salaries and -47.6 -52.6 -50.8 -57.9
employee benefits expenses
Depreciation -8.9 -8.4 -9.1 -7.9
Other operating expenses -50.0 -55.1 -51.7 -58.1
Operating profit 32.1 14.1 8.2 50.5
Finance income and expenses -0.5 -0.8 -0.2 -0.5
Profit before tax 31.5 13.3 8.0 50.1
Income taxes -8.1 -3.2 -1.9 -12.3
Profit for the period, 23.5 10.2 6.1 37.8
continuing operations
Discontinued operations
Profit for the period,
discontinued operations
Profit for the period 23.5 10.2 6.1 37.8
Earnings per share,
continuing operations, EUR
Basic 0.43 0.18 0.11 0.70
Diluted 0.42 0.18 0.11 0.69
Earnings per share,
discontinued operations,
EUR
Basic 0.00
Diluted -0.01
Earnings per share, total,
EUR
Basic 0.43 0.18 0.11 0.70
Diluted 0.42 0.18 0.11 0.68
Q3 Q2 Q1 Q4
Sales, EUR millions 2007 2007 2007 2006
Department Store Division 275.5 261.0 281.2 363.4
Hobby Hall 45.9 46.0 55.6 55.5
Seppälä 45.4 43.5 34.6 45.3
Shared 0.2 0.2 0.2 0.2
Continuing operations, 367.0 350.7 371.7 464.4
total
Discontinued operations
Group 367.0 350.7 371.7 464.4
Revenue, EUR millions
Department Store Division 232.2 219.6 236.3 305.5
Hobby Hall 38.2 38.1 46.2 46.1
Seppälä 37.8 36.1 28.7 37.5
Shared 0.5 0.4 0.1 0.5
Continuing operations, 308.6 294.2 311.4 389.6
total
Discontinued operations
Group 308.6 294.2 311.4 389.6
Operating profit, EUR
millions
Department Store Division 25.7 11.5 7.8 44.3
Hobby Hall 2.5 -0.9 1.5 3.4
Seppälä 5.5 5.8 0.8 7.3
Shared -1.1 -2.1 -1.8 -3.8
Eliminations -0.5 -0.1 0.0 -0.6
Continuing operations, 32.1 14.1 8.2 50.6
total
Discontinued operations
Group 32.1 14.1 8.2 50.6
Income statement
quarterly, Q3 Q2 Q1 Q4
Group, EUR millions 2006 2006 2006 2005
Continuing operations
Revenue 281.1 299.5 269.4 379.3
Other operating income 0.0 4.7 0.0 7.0
Materials and consumables -166.1 -170.8 -168.7 -214.3
Wages, salaries and -44.2 -48.9 -48.3 -56.5
employee benefits expenses
Depreciation -7.9 -8.1 -8.0 -8.7
Other operating expenses -43.0 -47.7 -43.7 -52.8
Operating profit 19.8 28.7 0.8 53.9
Finance income and expenses 0.5 -0.9 0.2 -2.0
Profit before tax 20.4 27.9 1.1 52.0
Income taxes -5.0 -6.6 -0.3 -13.3
Profit for the period, 15.4 21.2 0.8 38.6
continuing operations
Discontinued operations
Profit for the period, 21.9 7.6 3.7
discontinued operations
Profit for the period 15.4 43.1 8.4 42.4
Earnings per share,
continuing operations, EUR
Basic 0.29 0.39 0.01 0.72
Diluted 0.28 0.39 0.01 0.71
Earnings per share,
discontinued operations,
EUR
Basic -0.01 0.41 0.14 0.07
Diluted 0.00 0.40 0.14 0.07
Earnings per share, total,
EUR
Basic 0.28 0.15 0.79
Diluted 0.28 0.79 0.15 0.78
Q3 Q2 Q1 Q4
Sales, EUR millions 2006 2006 2006 2005
Department Store Division 249.0 270.8 235.8 344.3
Hobby Hall 45.5 46.2 52.6 63.4
Seppälä 40.2 40.2 32.4 45.1
Shared 0.2 0.3 0.2 0.2
Continuing operations, 334.9 357.6 320.9 453.1
total
Discontinued operations 74.8 117.4
Group 334.9 357.6 395.7 570.5
Revenue, EUR millions
Department Store Division 209.8 227.4 198.5 289.0
Hobby Hall 37.8 38.4 43.6 52.6
Seppälä 33.2 33.3 26.8 37.3
Shared 0.2 0.4 0.5 0.5
Continuing operations, 281.1 299.5 269.4 379.3
total
Discontinued operations 61.1 96.4
Group 281.1 299.5 330.5 475.7
Operating profit, EUR
millions
Department Store Division 13.1 22.2 -0.1 37.8
Hobby Hall 2.1 0.6 1.0 4.3
Seppälä 5.4 7.6 0.8 14.5
Shared -0.9 -1.9 -1.4 -3.3
Eliminations 0.1 0.2 0.6 0.6
Continuing operations, 19.8 28.7 0.8 53.9
total
Discontinued operations 21.9 7.7 4.1
Group 19.8 50.6 8.5 58.0
STOCKMANN plc
Hannu Penttilä
CEO
DISTRIBUTION
OMX Nordic Exchange Helsinki
Principal media
A press and analyst conference will be held today, October 24, 2007, at
14.00 at the World Trade Center, Aleksanterinkatu 17, Helsinki.