Group’s third-quarter operating result back to profit
STOCKMANN plc, Interim report 28.10.2016 at 8:00 EET
July-September 2016:
- Consolidated revenue was EUR 288.9 million (EUR 317.9 million).
- Revenue in continuing product areas and businesses was down by 5.5 per cent.
- Gross margin was up, to 54.8 per cent (51.8 per cent).
- Operating profit was EUR 2.9 million (EUR -10.6 million).
January-September 2016:
- Consolidated revenue was EUR 914.7 million (EUR 1 014.7 million).
- Revenue in continuing product areas and businesses was down by 3.0 per cent.
- Gross margin was up, to 53.3 per cent (50.4 per cent).
- Operating result was EUR -16.3 million (EUR -56.8 million).
- Result for the period was EUR -40.6 million (EUR -69.7 million).
- Earnings per share were EUR -0.62 (EUR -0.97).
- Continuously good performance for Lindex and Real Estate; Stockmann Retail
remains a challenge despite improved Q3 operating result.
- Department store operations in Russia have been classified as discontinued
operations. The comparison figures in the income statement and related items
have been restated accordingly. The comments in the report refer only to
continuing operations.
Outlook for 2016 remains unchanged:
Stockmann expects the Group’s revenue for 2016 to be down on 2015 due to ongoing
strategic actions in order to improve profitability. The adjusted operating
result is expected to be slightly positive in 2016.
CEO Lauri Veijalainen:
Stockmann continues to implement its strategy by focusing on its core
businesses, Stockmann Retail, Real Estate and Lindex. In the third quarter, the
Group’s operating result of EUR 2.9 million (EUR -10.6 million) improved for the
sixth consecutive quarter. Particularly gratifying was the fact that, for the
first time in three years, the third-quarter Group result was positive.
The results are gradually starting to follow the right track. The Group’s gross
margin improved during the quarter, to 54.8 per cent, with improvements made in
both Stockmann Retail and Lindex. Lindex continued its earnings growth, though
the September sales were weak in the Swedish fashion market for retailers.
Stockmann Retail improved its operating result due to several cost savings
measures through the efficiency programme, although sales were below
expectations and the turnaround must be sped up. During the quarter we
successfully continued the refurbishments in the Helsinki flagship store and the
renovation of the Delicatessen in the Turku department store. In addition, we
made major reorganisations of our operations during the summer.
Real Estate’s performance was continuously stable, with the situation in the
Nevsky Centre in St Petersburg improving as the occupancy rate rose during the
quarter through new signed tenant agreements. As a change to the current
strategy, the Board of Directors has decided to investigate a possible
divestment of the Nevsky Centre.
The Crazy Days campaign took place in October, after the end of the quarter. We
are rather satisfied with the results, and this is a good starting point for the
last quarter of the year. We will put all of our efforts into the upcoming
Christmas season to ensure successful results, as they play a crucial role in
Stockmann’s full-year performance.
Key figures
Continuing operations 7-9/ 7-9/ 1-9/ 1-9/ 1-12/
2016 2015 2016 2015 2015
Revenue, EUR mill. 288.9 317.9 914.7 1 014.7 1 434.8
Gross margin, per cent 54.8 51.8 53.3 50.4 50.6
Operating result, EUR mill. 2.9 -10.6 -16.3 -56.8 -52.5
Adjustments to operating 0.0 3.2 0.0 9.8 24.0
result*, EUR mill.
Adjusted operating result 2.9 -7.4 -16.3 -47.0 -28.5
(EBIT), EUR mill.
Adjusted operating result before 17.6 10.0 27.6 5.4 43.4
depreciation (EBITDA), EUR mill.
Net financial costs, EUR mill. 5.0 4.9 14.0 14.0 21.2
Result before tax, EUR mill. -2.1 -15.5 -30.2 -70.8 -73.7
Result for the period, EUR mill. -7.3 -10.4 -40.6 -69.7 -88.9
Earnings per share, undiluted, -0.12 -0.14 -0.62 -0.97 -1.24
EUR
Personnel, average 9 144 10 750 9 200 10 966 10 763
Continuing and discontinued 7-9/ 7-9/ 1-9/ 1-9/ 1-12/
operations 2016 2015 2016 2015 2015
Net earnings per share, -0.12 -0.23 -0.47 -1.17 -2.43
undiluted, EUR
Cash flow from operating -33.7 -31.8 -54.6 -79.8 17.2
activities, EUR mill.
Capital expenditure, EUR mill. 10.1 10.8 29.6 37.0 53.4
Equity per share, EUR 14.05 14.19 14.53
Net gearing, per cent 80.8 89.9 72.1
Equity ratio, per cent 45.4 43.8 46.1
Number of shares, undiluted, 72 049 72 049 72 049
weighted average, 1 000 pc
Return on capital employed, -3.5 -5.2 -7.6
rolling 12 months, per cent
*Adjustments in 2015 were related to the Academic Bookstore, the Oulu store,
Seppälä and the Group’s other restructuring costs.
Stockmann has revised the terminology used in its reporting due to the new
guidelines of the European Securities and Market Authority (ESMA). Alternative
Performance Measures are used to better reflect the operational business
performance and to facilitate comparisons between financial periods. Starting
from the second quarter of 2016, the previously used term “excluding non
-recurring items” has been replaced with the term “adjusted”, and, as a
consequence, “operating profit (EBIT) excluding non-recurring items” has been
replaced with the term “adjusted operating profit (EBIT)”. Correspondingly,
“adjusted EBITDA” is calculated from adjusted operating profit excluding
depreciation.
Stockmann uses the term “continuing product areas and businesses” which refers
to operations excluding Russian retail operations (Stockmann and Lindex),
Seppälä, Hobby Hall, Stockmann Beauty, the airport store and the product areas
the company has withdrawn from in department stores (electronics, books, sports
equipment, toys and pet supplies). Gross profit and gross margin are also used
as alternative performance measures. Gross profit is calculated by deducting the
costs of goods sold from the revenue, and gross margin is calculated by dividing
gross profit by the revenue as a percentage.
Strategy
The Stockmann Group is focusing on developing its retail operations and real
estate business in its department store properties. Furthermore, development and
expansion of the Lindex fashion chain will continue. Stockmann will consider to
divest the Nevsky Centre shopping centre in St Petersburg.
Stockmann is investing in the renewal of its department stores in order to offer
an improved customer experience. Stockmann will open a completely new department
store in Tapiola in March 2017. In the Helsinki flagship store, significant
refurbishments were on-going during the third quarter. The new women’s
accessories and the home departments were opened in August. Furthermore, many
new partners opened their stores within the Helsinki flagship store. The
renewals will be finalised in November when, for example, new cafés and cosmetic
brands will be introduced.
In the Turku department store, a project to renovate the Delicatessen food
department started in the second quarter and will be ready by November. In
Tallinn, the department store’s fifth floor underwent major renovation work, and
was re-opened in October with several new partner services and shops. In Riga,
several new tenant shops were opened on the second floor of the department
store.
The new Stockmann online store will be launched during the fourth quarter of
2016. The online store will operate on a new platform and will gradually gain
several new features, such as online availability for the goods in the brick-and
-mortar stores. A new Crazy Days online store was launched in October when the
campaign took place.
Outlook for 2016
In the Stockmann Group’s main operating country, Finland, the general economic
situation remains uncertain and only slow GDP growth is estimated. Consumers’
purchasing power is expected to remain low, and the development of the non-food
retail market is likely to continue being weak. At the same time, competition is
increasing.
The GDP growths for Sweden, Norway and the Baltic countries are estimated to be
somewhat higher than in Finland. The affordable fashion market in Sweden is
expected to remain relatively stable. In the Baltic countries, more competition
is expected in the retail market.
Economic development in Russia is expected to remain weak in 2016. This has had
a negative impact on the rental income from tenants in Stockmann’s real estate
business.
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 be reflected in Stockmann’s performance from 2016 onwards. The new
organisational model which was taken into use in the third quarter, will reduce
costs by approximately EUR 20 million during 2017.
Capital expenditure for 2016 is estimated to be approximately EUR 40-45 million
which is less than the estimated depreciation for 2016.
Stockmann expects the Group’s revenue for 2016 to be down on 2015 due to on
-going strategic actions in order to improve profitability. The adjusted
operating result is expected to be slightly positive in 2016.
Press and analyst briefing
A press and analyst briefing will be held today, on 28 October 2016 at 9:15 a.m.
EET in Fazer's À la Carte restaurant on the 8th floor of Stockmann’s Helsinki
city centre department store, Aleksanterinkatu 52 B.
Webcast
CEO Lauri Veijalainen will host a webcast in English on 28 October 2016, 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 webcast begins. The
presentation can be followed by this link (https://stockmann.videosync.fi/2016
-10-28-q3) or on the address stockmanngroup.com. (http://www.stockmanngroup.com)
The recording and presentation material are available on the company's website
after the event.
Finland: +358 9 7479 0404
Sweden: +46 8 5065 3942
United Kingdom: +44 20 3043 2026
United States of America: +1 719 457 1036
Confirmation code: 1217387
Site Visit
Stockmann will arrange a site visit for investors and analysts to its new
distribution centre in Jussla, Tuusula on 23 November 2016. A detailed agenda
and further information about the event is available from Stockmann’s Media Desk
(info@stockmann.com).
Further information:
Lauri Veijalainen, CEO, tel. +358 9 121 5062
Nora Malin, Director, Corporate Communications, tel. +358 9 121 3558
www.stockmanngroup.com
STOCKMANN plc
Lauri Veijalainen
CEO
Distribution:
Nasdaq Helsinki
Principal media
