Stockmann Group’s Financial Statements Bulletin 2021

2021 was the year of a strong turnaround; the fourth-quarter adjusted operating result was clearly up in both divisions and Lindex achieved its best-ever full-year result

STOCKMANN plc, Financial Statement Release, 25.2.2022 at 8.00 EET

October–December 2021:
- Consolidated revenue was EUR 277.5 million (232.0), up 17.2% in comparable currency rates.
- Gross margin was 57.7% (58.0).
- Operating result was EUR 50.6 million (-256.0).
- The adjusted operating result was EUR 29.6 million (-3.3).
- Earnings per share were EUR 0.23 (-3.20).
- Adjusted earnings per share were EUR 0.09 (0.16).

January–December 2021:
- Consolidated revenue was EUR 899.0 million (790.7), up 11.2% in comparable currency rates.
- Gross margin was 58.6% (56.1).
- Operating result was EUR 82.1 million (-269.6).
- The adjusted operating result was EUR 68.3 million (-12.3).
- Earnings per share were EUR 0.42 (-3.89).
- Adjusted earnings per share were EUR 0.30 (-0.46).

The Board of Directors will propose that no dividend will be paid for the financial year 2021.

Guidance for 2022:
Stockmann expects an increase in the Group’s revenue and that the adjusted operating result will be clearly positive assuming that no major COVID-19 restrictions are imposed.

CEO Jari Latvanen:
Stockmann Group’s fourth quarter was strong despite the continuing COVID-19 pandemic. The adjusted operating result improved by EUR 32.9 million. The full-year adjusted operating result improved by EUR 80.5 million as a consequence of agile adaptation to the COVID-19 situation, enhanced sales and strong marketing activities.

Lindex performed extremely well and the adjusted operating result for the fourth quarter improved by EUR 9.4 million. The adjusted operating result for the full-year 2021 was Lindex’s best result ever and amounted to EUR 80.3 million. The Stockmann division also had a good fourth quarter. The adjusted operating result improved by EUR 23.8 million. The full-year adjusted operating result improved by EUR 38.3 million, but still remains negative due to the challenging first half of the year. The COVID-19 pandemic created challenges for international logistics and significantly reduced customer footfall during 2021. However, visits to department stores and fashion stores picked up from the level in 2020, and online shopping also continued to grow strongly in 2021. 

Stockmann Group continued the determined implementation of the strategy by renewing channels, enhancing presence in the markets and developing the offering and service. Additionally Lindex invested in the femtech industry to create new business and growth opportunities within products to improve women’s well-being through the various stages of life. The Stockmann division started an extensive renewal of its operating model, through which the organisation will be centred more closely around the core process. The purpose of the renewal is to improve customer experience and streamline processes.

Stockmann plc systematically implemented the corporate restructuring programme approved on 9 February 2021, and the key measures were accomplished at a rapid rate. Stockmann combined its series of shares and carried out debt and share conversions in May–July. In December 2021, the company signed agreements to sell department store properties in Tallinn and Riga and to enter into long-term leaseback with the new owner. The process to sell the department store property in the centre of Helsinki is progressing as planned. 

Stockmann Group has proven to be effective in both divisions’ strategies and we will continue the implementation, listening to customers closely and observing the operating environment. Stockmann will also continue to further develop the sustainability of its operations. Stockmann Group has made a commitment to the SBTi initiative, as a consequence of which we will set science-based climate targets for reducing greenhouse gas emissions in our own operations and the Group’s value chain. 

KEY FIGURES

ITEMS AFFECTING COMPARABILITY

The 2020 figures are restated for costs related to SaaS arrangements. Additionally, the costs related to landlords’ disputed claims for terminated lease agreements in 2020 have been reclassified from financing items to operating costs. 

STRATEGY

Stockmann Group consists of two business divisions; the Lindex fashion group and Stockmann department stores and webstores.

Lindex’s purpose is to empower and inspire women everywhere. We do that through actions as a company and through a progressive fashion experience. Our customers, co-workers and partners are all part of this ambition. We are digital first and powered by people. We promise customers fashion that feels and looks good. To fulfil our purpose and vision, we have made a promise – to make a difference for future generations. The purpose includes all dimensions of sustainability and is divided into three areas: empower women, respect the planet and ensure human rights.

According to Lindex’s long-term strategy, we aim to be a global, brand-led, sustainable fashion company. This means growth in digital revenue, both in our own e-commerce as well as in collaborations with global digital platforms, improved cost efficiency and also growth with new businesses, while at the same time meeting our sustainability targets.

Stockmann’s purpose in all encounters with its customers, partners, employees and other stakeholders is to make a new impression, every day. Our vision is to create a marketplace for a good life. Customer centricity, i.e., the capability to understand customers and to serve them in the way they choose and to provide a unique customer experience, is the core of the strategy. We provide a curated merchandise selection in fashion, beauty, home and food combined with various services for our customers in our eight department stores as well as in the online store. For customers the Stockmann promise is to create a feeling that lasts, which we provide with our professional and service-minded personnel.

Stockmann’s financial priorities for the strategy period are: Revenue growth and to improve profitability and return on investments.

CORPORATE RESTRUCTURING PROGRAMME

In a decision on 9 February 2021, the Helsinki District Court approved Stockmann plc’s restructuring programme, and the restructuring proceedings were ended. The restructuring programme is based on the continuation of Stockmann’s department store operations, the sale and leaseback of the department store properties located in Helsinki, Tallinn and Riga and the continuation of Lindex’s business operations as a fixed part of the Stockmann Group. The aforementioned properties were initially required to be sold by 31 December 2021 at the latest at the risk of the lapsing of the restructuring programme, unless the supervisor decided to postpone the deadline for the sale until 31 December 2022 for a justified reason. The supervisor subsequently accepted a timeline with the estimated sale of the properties at the latest during Q1 2022 in order to reach the optimal outcome for the company and the creditors. Stockmann signed on 29 December 2021 agreements to sell its department store properties in Tallinn and Riga and to continue with long-term leaseback with the new owner. The sale and leaseback of the department store property in Tallinn was booked in the fourth quarter of 2021. The sale and leaseback of the department store property in Riga will be booked in the first quarter of 2022 because the registration of the sold shares could not be made until in January 2022. The proceeds from the sales of the properties were used, according to the restructuring programme, in full to reduce the secured restructuring debts.The sale and leaseback process of the department store property in the centre of Helsinki is proceeding as planned.

On 18 May 2021, the Board of Directors resolved, pursuant to the authorisation granted by the General Meeting, on a share issue of at most 100 000 000 new shares of the company, carried out in deviation from the shareholders’ pre-emptive subscription rights. Furthermore, pursuant to the restructuring programme, the creditors of unsecured restructuring debt were entitled to convert their receivables under the payment programme of the restructuring programme to new senior secured bonds issued by the company.

A total of 79 335 175 conversion shares were subscribed for in the share issue, and the total number of Stockmann shares increased to a total of 154 436 944 shares. Trading with the conversion shares commenced on Nasdaq Helsinki Ltd on 7 July 2021. The subscription price was EUR 0.9106 per share and, as a result, approximately EUR 72.2 million of Stockmann's unsecured restructuring debt and hybrid loan debt were converted into Stockmann shares. The remainder of that part of the confirmed unsecured restructuring debt and hybrid loan debt which would have been eligible for share conversion in the share issue will be cut in accordance with the restructuring programme (Stock Exchange Release, 5 July 2021). Other operating income includes a restructuring debt cut of EUR 2.6 million.

On 18 May 2021, Stockmann plc announced an offering of senior secured bonds to certain unsecured creditors of the issuer under the restructuring. Pursuant to the restructuring programme, the unsecured creditors were entitled to convert their receivables under the payment programme of the restructuring programme that have been confirmed to unsecured debt, by way of set-off, to senior secured bonds on a euro-for-euro basis. The aggregate principal amount of the bonds validly subscribed for by the unsecured creditors was EUR 66.1 million. Accordingly, Stockmann issued bonds to the aggregate principal amount of EUR 66.1 million. The issue date of the bonds was 5 July 2021. Trading of the bonds on the official list of Nasdaq Helsinki Ltd commenced on 7 July 2021 under the trading code ‘STCJ001026’.

Following the share and bond conversions, the remaining confirmed unsecured restructuring debt under the payment programme of the restructuring programme amounts to approximately EUR 21.8 million. Under the restructuring programme, Stockmann also has restructuring debt that is conditional, the maximum amount or disputed in respect of which the amount subject to the payment programme will be confirmed later and the creditors of such restructuring debt will be entitled to convert their receivables to shares and bonds after their respective receivables have been confirmed (Stock Exchange Release, 5 July 2021).

COVID-19

The COVID-19 pandemic, which broke out in Europe after the first week of March 2020, is still causing significant changes in Stockmann Group’s operating environment and customer volumes. During the first half of 2021, the pandemic continued to have a negative impact on business, especially in customer volumes in the brick-and-mortar stores. The online sales were not able to fully compensate for the decline despite the strong increase in e-commerce. In the third quarter of 2021, the lifted restrictions related to COVID-19 had a positive effect on Stockmann Group’s operating environment and customer volumes. In the fourth quarter of 2021, the Group’s sales increased in both divisions despite the uncertainty regarding multiple changes in the COVID-19 restrictions.

The online sales grew rapidly in 2020 due to uncertainty surrounding the pandemic and government restrictions, which reduced customer traffic in the brick-and-mortar stores. This development was partly reversed in the second half of 2021 with vaccine rollout and eased restrictions, enabling the customers to return to the brick-and-mortar stores.

In the Lindex division, sales during the fourth quarter in brick-and-mortar stores were affected by new COVID-19 restrictions that closed stores in some markets. However, growth in online sales continued to increase significantly and more than fully compensated for the drop in sales in brick-and-mortar stores compared to 2019.

The Stockmann division’s visitor and customer volumes were on a par or above the previous year in the fourth quarter despite rising COVID-19 cases. The rising number of Covid-19 cases led to new government-issued restrictions during the final days of December. The Stockmann division’s fourth quarter sales exceeded the previous year’s sales. This improvement is evenly distributed across all months of the quarter.

GUIDANCE FOR 2022

Stockmann expects an increase in the Group’s revenue and that the adjusted operating result will be clearly positive assuming that no major COVID-19 restrictions are imposed.

MARKET OUTLOOK FOR 2022

Uncertainty in the global economy is expected to persist throughout 2022, and the COVID-19 pandemic will continue to have an impact on the economy across the world, until the coronavirus situation is under better control. The retail market is expected to remain challenging due to changes in consumer behaviour and confidence as well as inflatory pressures.

The Stockmann division will continue to execute the restructuring programme and Lindex to explore new growth opportunities.

CORPORATE GOVERNANCE STATEMENT

Stockmann will publish a separate Corporate Governance Statement for 2021 in line with the recommendation by the Finnish Corporate Governance Code. The statement will be published during the week starting on 28 February 2022 (week 9).

Financial Statements Bulletin 2021
This company announcement is a summary of the Stockmann's Financial Statements Bulletin 2021 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.

Webcast
The press and analyst briefing will be held today, on 25 February 2022 at 10:00 as a live webcast, that can be followed by this link or on the address stockmanngroup.com. The recording and presentation material are available on the company's website after the event.

Further information:
Jari Latvanen, CEO, tel. +358 9 121 5606
Pekka Vähähyyppä, CFO, tel. +358 9 121 3351

www.stockmanngroup.com

STOCKMANN plc

Jari Latvanen
CEO

Distribution:
Nasdaq Helsinki
Principal media