Stockmann Group's Half year financial report 1 January - 30 June 2018
The Group’s adjusted operating profit improved by EUR 9.3 million in Q2
– a strong quarter for Lindex
STOCKMANN plc, Stock Exchange Release 16.8.2018 at 8:00 EET
April-June 2018, continuing operations:
- Consolidated revenue was EUR 279.4 million (281.3).
- Gross margin was 58.2% (56.1).
- Adjusted operating result was EUR 23.8 million (14.6).
- Reported operating result was EUR 29.6 million (14.6), including a capital gain of EUR 7.0 million from the divestment of the Book House property in Helsinki.
January-June 2018, continuing operations:
- Consolidated revenue was EUR 481.8 million (498.1).
- Gross margin was 56.9% (54.9).
- Adjusted operating result was EUR -1.0 million (-10.5).
- Reported operating result was EUR 2.7 million (-10.5).
- Adjusted earnings per share were EUR -0.37 and reported earnings per share were EUR -0.35
(-0.42).
Guidance for 2018 remains unchanged:
Stockmann expects the Group’s revenue for 2018 to be on a par with the previous year. Adjusted operating profit is expected to improve in 2018.
CEO Lauri Veijalainen:
Our second quarter was a good quarter for the Group. The Group’s performance improved and the adjusted operating profit was up by nearly EUR 10 million. The gross margin continued to improve due to healthy inventory levels and reduced clearance sales.
Lindex showed solid sales growth thanks to strong, renewed spring and summer collections which led to increased sales in all markets and channels. The tough but needed cost savings are also starting to bear fruit. The gross margin improved and subsequently the adjusted operating result increased by EUR 8 million.
In Stockmann Retail, the Crazy Days campaign in April was a success, but sales were slower towards the end of the quarter. We aim to compensate the decline in revenue with an improved gross margin and cost savings throughout 2018, and thus to catch up with Retail’s performance improvement schedule targets. However, Stockmann Retail is not expected to reach a positive operating result for the full year. Digital projects aiming at increasing sales are also under way.
Real Estate’s performance continued as planned. Based on customer feedback, we introduced several new restaurants and cafés in our department stores during the quarter. The divestment of the Book House in Helsinki was completed. Investigations into the possible divestment of the Nevsky Centre in St Petersburg are being actively pursued.
In the autumn, we will continue to speed up our strategic projects, particularly digital acceleration, in order to reach the growth targets and improve our profitability. Due to seasonality, the most important months are ahead of us, in the second half of 2018.
KEY FIGURES
| Continuing operations | 4-6/ 2018 |
4-6/ 2017 |
1-6/ 2018 |
1-6/ 2017 |
1-12/ 2017 |
| Revenue, EUR mill. | 279.4 | 281.3 | 481.8 | 498.1 | 1 055.9 |
| Gross margin, % | 58.2 | 56.1 | 56.9 | 54.9 | 55.8 |
| EBITDA, EUR mill. | 43.5 | 29.5 | 30.8 | 19.4 | 67.6 |
| Adjusted EBITDA, EUR mill. | 37.7 | 29.5 | 27.1 | 19.4 | 73.2 |
| Operating result (EBIT), EUR mill. | 29.6 | 14.6 | 2.7 | -10.5 | -148.4 |
| Adjusted operating result (EBIT), EUR mill. | 23.8 | 14.6 | -1.0 | -10.5 | 12.3 |
| Net financial items, EUR mill.* | -8.8 | -10.8 | -17.5 | -15.4 | -31.1 |
| Result before tax, EUR mill. | 20.8 | 3.8 | -14.8 | -25.9 | -179.5 |
| Result for the period, EUR mill. | 8.0 | -1.1 | -22.9 | -28.0 | -198.1 |
| Earnings per share, undiluted and diluted, EUR |
0.09 | -0.03 | -0.35 | -0.42 | -2.82 |
| Personnel, average | 7214 | 7224 | 7144 | 7217 | 7 360 |
| Continuing and discontinued operations** | 4-6/ 2018 |
4-6/ 2017 |
1-6/ 2018 |
1-6/ 2017 |
1-12/ 2017 |
| Net earnings per share, undiluted and diluted, EUR |
0.09 | -0.09 | -0.35 | -0.52 | -2.98 |
| Cash flow from operating activities, EUR mill. | 79.7 | 48.2 | 17.9 | -29.9 | 25.9 |
| Capital expenditure, EUR mill. | 7.4 | 7.9 | 15.1 | 15.7 | 34.7 |
| Equity per share, EUR | 11.92 | 14.32 | 12.29 | ||
| Net gearing, % | 72.7 | 76.5 | 83.8 | ||
| Equity ratio, % | 45.7 | 46.9 | 43.0 | ||
| Number of shares, undiluted and diluted, weighted average, 1 000 pc | 72 049 | 72 049 | 72 049 | ||
| Return on capital employed, rolling 12 months, % | -8.3 | 1.3 | -9.1 |
* Includes a write-off of EUR 3.8 million related to Stockmann’s investment in Tuko Logistics Cooperative (Q2 2017), EUR 2.0 million related to Seppälä (Q3 2017), and EUR 1.5 million related to Hobby Hall (Q4 2017).
** Discontinued operations include Stockmann Delicatessen food operations in Finland (2017).
Items affecting comparability
| EUR million | 4-6/ 2018 |
4-6/ 2017 |
1-6/ 2018 |
1-6/ 2017 |
1-12/ 2017 |
| Adjusted EBITDA | 37.7 | 29.5 | 27.1 | 19.4 | 73.2 |
| Adjustments to EBITDA | |||||
| Restructuring arrangements | -1.2 | -3.3 | -9.6 | ||
| Fair value gains and losses on investment properties |
4.0 | ||||
| Gain on sale of properties | 7.0 | 7.0 | |||
| Adjustments total | 5.7 | 3.7 | -5.6 | ||
| EBITDA | 43.5 | 29.5 | 30.8 | 19.4 | 67.6 |
| EUR million | 4-6/ 2018 |
4-6/ 2017 |
1-6/ 2018 |
1-6/ 2017 |
1-12/ 2017 |
| Adjusted operating result (EBIT) | 23.8 | 14.6 | -1.0 | -10.5 | 12.3 |
| Adjustments to EBIT | |||||
| Lindex goodwill impairment | -150.0 | ||||
| Restructuring arrangements | -1.2 | -3.3 | -14.6 | ||
| Fair value gains and losses on investment properties |
4.0 | ||||
| Gain on sale of properties | 7.0 | 7.0 | |||
| Adjustments total | 5.7 | 3.7 | -160.6 | ||
| Operating result (EBIT) | 29.6 | 14.6 | 2.7 | -10.5 | -148.4 |
Stockmann uses Alternative Performance Measures according to the guidelines of the European Securities and Market Authority (ESMA) to better reflect the operational business performance and to facilitate comparisons between financial periods. 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. EBITDA is calculated from the operating result excluding depreciation, amortisation and impairment losses. Adjusted EBITDA and adjusted operating result (EBIT) are measures which exclude non-recurring items and other adjustments affecting comparability from the reported EBITDA and the reported operating result (EBIT).
OUTLOOK FOR 2018
In the Stockmann Group’s largest operating countries, Finland and Sweden, the general economic situations have improved and according to forecasts by the national central banks, the GDP growth is expected to continue in 2018. Consumer confidence is also estimated to continue its positive development.
However, purchasing behaviour is changing due to digitalisation and increasing competition. This is reflected in the outlook for the fashion market, which according to Stockmann’s management estimate is not developing as well as the economy in general.
In the Baltic countries, the outlook for the retail trade is, according to the management estimate, expected to be better than that for the Stockmann Group’s other market areas.
Stockmann will continue to improve the Group’s long-term competitiveness and profitability. The efficiency measures launched at Lindex at the end of 2017, and at Stockmann at the beginning of 2018, have mostly been implemented and they will be fully visible in the 2019 operating costs.
Capital expenditure for 2018 is estimated to be approximately EUR 40-45 million, which is less than the estimated depreciation for the year.
GUIDANCE FOR 2018
Stockmann expects the Group’s revenue for 2018 to be on a par with the previous year. Adjusted operating profit is expected to improve in 2018.
Half year financial report
This company announcement is a summary of the Stockmann's Half year finacial report for 1 January – 30 June 2018 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 webcast
A press and analyst briefing will be held today, on 16 August 2018 at 10:00 a.m. EET in the Fazer À la Carte restaurant on the 8th floor of Stockmann’s Helsinki city centre department store, Aleksanterinkatu 52 B. The event can be followed as a live webcast by this link or on the address stockmanngroup.com. To participate in the webcast, please dial one of the numbers below 5–10 minutes before the webcast begins. The recording and presentation material are available on the company's website after the event.
Finland: +358 (0)9 7479 0360
Sweden: +46 (0)8 5033 6573
United Kingdom: +44 (0)330 336 9104
United States of America: +1 323 974 2095
Confirmation code: 424569
Further information:
Lauri Veijalainen, CEO, tel. +358 9 121 5062
Kai Laitinen, CFO, tel. +358 9 121 5800
STOCKMANN plc
Lauri Veijalainen
CEO
Distribution:
Nasdaq Helsinki
Principal media