Progress in creating a new Stockmann – the company will accelerate its efficiency measures and appoint a new Management Team


STOCKMANN plc, Company Announcement 13.6.2016 at 13:00 EET

Stockmann confirmed its new strategic direction at the end of 2014 and since
then has been implementing its strategy in challenging market conditions. The
company has made considerable changes to its operations and discontinued
unprofitable businesses. These measures will improve Stockmann’s profitability
during 2016.

In spring 2015 Stockmann launched a large-scale efficiency programme. The
programme will gradually have an impact on operating costs during 2016. It is
anticipated that the annual savings target of EUR 50 million will be achieved by
the end of 2016. The new distribution centre that has been taken into use will
produce additional savings as of 2017.

To accelerate the turnaround of the loss-making Stockmann Retail division,
Stockmann will enter the next stage of its strategy implementation. The target
is for Stockmann Retail to achieve a positive operating result (EBIT) in 2018.
Stockmann’s outlook for 2016 (stock exchange announcement 18 February 2016)
remains unchanged: The Group’s operating result excluding non-recurring items is
expected to be slightly positive in 2016.

”The market conditions have been more challenging than predicted for a long time
now and consumer behaviour has changed considerably. Despite the changes that we
have made, Stockmann’s sales performance has not lived up to our expectations
and our cost structure is too heavy in relation to our current revenue level. We
need to develop our operations in order to quicker meet the needs of the
continuously changing customer needs and offer a competitive customer experience
both in department stores and online,” says Lauri Veijalainen, Stockmann’s
interim CEO.

Codetermination negotiations to start in Finland

To adjust the cost structure, Stockmann will initiate codetermination
negotiations affecting approximately 3 000 employees in Finland. The aim of the
negotiations will be to find solutions that will make the number of Stockmann’s
employees correspond with the scope of current operations and with benchmarks
carried out among international department store retailers. The number of
department store sales assistants will not be reduced to ensure excellent
customer service. The measures are expected to result in the reduction of around
380 employees in Finland and will include lay-offs, pension plans and the
termination of temporary employment relationships. The potential reductions will
be implemented from autumn 2016 onwards.

The goal is annual cost savings of approximately EUR 20 million, which will be
achieved during 2017. Non-recurring costs related to possible personnel
reductions, which are booked for 2016, will be defined after the negotiations
have been ended.

New organisation and new Management Team

Stockmann’s target is to considerably flatten its organisational structure,
eliminate overlaps and simplify processes. A new organisation is planned, which
will be negotiated with the personnel as part of the codetermination
negotiations and it would be introduced in full on 15 August 2016. The
organisation would comprise the following functions:

Store Operations, which is responsible for sales in Stockmann’s department
stores. Maiju Niskanen M.Sc. (Econ.), born 1977, has been appointed to lead the
new function. Niskanen is currently Country Manager for Lindex Finland and the
Baltic countries. She joined the Stockmann Group in 2001 and has held several
positions in buying, store operations and business controlling at Lindex and in
Stockmann department stores.

Delicatessen, which is a function responsible for food buying and Delicatessen’s
store operations and services, and will be led by Susanna Ottila, M.Sc. (Econ.),
born 1968. Ottila joined Stockmann in 2014 and has led Stockmann’s food chain
since 2015. She has over 10 years of experience in marketing and business
development management in food industry in e.g. Vaasan Oy and Unilever.

Real Estate, which will continue to be led by Björn Teir, Director, Real Estate.

Marketing and Digitalisation, which is a new function responsible for marketing,
loyal customer, and digital services at Stockmann. The director for the function
will be appointed at a later stage.

Supply Chain, which is a new function responsible for the department stores' non
-food buying organisation and logistics, and will be led by Tove Westermarck.
Westermarck has been Director, Development and a member of the Management Team
since autumn 2014.

Communications and CSR, which will continue to be led by Nora Malin, Director,
Corporate Communications.

ICT and Process Development, which will continue to be led by Petteri Naulapää,
CIO.

HR, which will continue to be led by acting HR Director Katri Koro.

Finance and Legal, which will be led by acting CFO Eva Mansikka-Mikkola and
Jukka Naulapää, Director of Legal Affairs, who also continues as the secretary
of the Management Team and Board of Directors.

The Management Teams of the Stockmann Group and Stockmann Retail will be merged
to speed up decision-making. Stockmann’s Management Team consists of the
following persons as of 13 June 2016: Lauri Veijalainen (chairman), Nora Malin,
Jukka Naulapää, Petteri Naulapää, Maiju Niskanen, Susanna Ottila, Björn Teir,
and Tove Westermarck. All Management Team members report to interim CEO Lauri
Veijalainen. Lindex will be developed independently as a separate group.
Lindex’s CEO Ingvar Larsson will continue to be a member of the Stockmann
Management Team.

Jouko Pitkänen, Director of Stockmann Retail and a member of the Stockmann
Management Team, has resigned and will leave his position according to mutual
agreement as of 13 June 2016.

Stockmann Retail, Real Estate and Lindex remain as the Group’s segments in
financial reporting.

Further information:
Lauri Veijalainen, Interim CEO, tel. +358 9 121 5062
Nora Malin, Director, Corporate Communications, tel. +358 9 121 3558

www.stockmanngroup.com

STOCKMANN plc

Lauri Veijalainen
Interim CEO

Distribution:
Nasdaq Helsinki
Principal media