Stockmann Group’s Half year financial report, 1 January – 30 June 2022

Continued strong growth and improved profitability in both Lindex and Stockmann

STOCKMANN plc, Half year financial report, 22.7.2022 at 8.00 EET

April–June 2022:
- Stockmann Group’s revenue was EUR  269.0 million (228.0), up 18.9% in comparable currency rates.
- Gross margin decreased to 59.4% (60.5).
- Operating result increased to EUR 114.5 million (26.4).
- The adjusted operating result was EUR 35.4 million (26.8).
- Earnings per share were EUR 0.52 (0.26).
- Net result for the quarter amounted to EUR 80.7 million (19.2).
 

January–June 2022:
- Stockmann Group’s revenue was EUR 465.1 million (383.7), up 22.3% in comparable currency rates.
- Gross margin remained at the same level of 58.7% (58.8).
- Operating result increased to EUR 124.3 million (-1.2).
- The adjusted operating result was EUR 31.6 million (5.8).
- Earnings per share were EUR 0.54 (-0.14).
- Net result for the period amounted to EUR 83.4 million (-10.3).

Guidance for 2022 (published 19.7.2022):
Stockmann expects an increase in the Group’s revenue and that the adjusted operating result improves compared to previous year. Guidance is based on the assumption that there will be no major changes in consumer spending during the latter part of the year. Geopolitical instability in the world with high inflation and challenges in the supply chains and international logistics as well as the challenges of COVID-19 restrictions require that both divisions have to be adaptive and flexible to meet the future.

Previous guidance (published 29.4.2022):
Stockmann expects an increase in the Group’s revenue and that the adjusted operating result will be clearly positive. Geopolitical instability in the world with high inflation and challenges in the supply chains and international logistics as well as the challenges of COVID-19 restrictions require that both divisions have to be adaptive and flexible to meet the future.

CEO Jari Latvanen:
Stockmann Group’s second-quarter result in 2022 improved significantly, thanks to Lindex’s strong performance and improved sales in both divisions. The net sales for the quarter grew by 18.9% in comparable terms, totalling EUR 269.0 million. The operating result for Q2 strongly improved from EUR 26.4, to 114.5 million, and alongside the operational improvement the result was postively impacted by the sale-and-leaseback of the Helsinki Flagship store.

Our comparable and adjusted operating profit totalled EUR 35.4 million, representing an increase of some EUR 9 million. Stockmann Group’s profitable growth is based on the right strategic choices and their successful execution. Our quarter-result has improved for six consecutive quarters and for the last 12 months has more than doubled compared to the level of  2019.

The Lindex division achieved especially good performance in all main markets, which resulted in a record Q2 and half-year result. In Q2, net sales grew by EUR 26.0 million and operating profit increased by EUR 6.7 million. Sales and profitability improved significantly thanks to the good performance in the physical stores during the quarter. Lindex’s total sales are now 21.9% higher than during 2019 in comparable currencies.

The Stockmann division also achieved a good result in Q2. Sales grew by 22.6% and the comparable adjusted result increased by EUR 2.6 million. The department stores are now almost on a break-even level on a rolling 12 basis due to increased customer traffic in the stores, improved margins and cost structure.

The sale-and-leaseback of the Helsinki Flagship store took place in April and Stockmann will further develop the property together with the new owner. The sale-and-leaseback affected the operating result positively in the quarter. In April the Board of Directors approved the decision to build a new omni-channel logistics centre for Lindex to enable further growth.

The systematic implementation of sustainability initiatives continued in both divisions. During Q2, the Lindex division invested in a new fibre based on an innovative process for large-scale recycling of textiles. Lindex also opened a pop-up store selling second-hand baby clothes and had a pre-launch of the new femtech brand Female Engineering. As part of systematic work within the environmental field the Stockmann division accomplished the ISO 14001 environmental management system audit for Finland. The Stockmann division also extended the textile recycling pilot to all the capital region department stores in Finland in cooperation with the Helsinki Region Environmental Services Authority HSY.

I would like to thank our teams in both divisions for their major contributions to the company and efforts to serve our customers, and also for the resilience during the exceptional occurrences in the operating environment which have affected Stockmann operations significantly during the last very challenging years.

KEY FIGURES

Where applicable, figures have been adjusted to correspond with the change in accounting policy.

*) Net profit/loss for the period – adjustments, see items affecting comparability / average number of shares, adjusted for share issue
 

ITEMS AFFECTING COMPARABILITY

CORPORATE RESTRUCTURING PROGRAMME

The restructuring process is proceeding according to plan, which means that all Stockman’s department store properties have been sold and both the secured restructuring debt and undisputed unsecured restructuring debt have been paid. The department store property in Tallinn was sold in December 2021 and the agreement for the sale of the Riga department store property was signed in December 2021 with closure in January 2022. The department store property in Helsinki city centre was sold in April 2022 and the last restructuring debt was paid.

Other measures and undertakings, as specified in Stockmann plc’s restructuring programme, were already completed during 2021, and are explained in the annual report 2021.

There are still disputed claims regarding the termination of lease agreements that must be settled before the restructuring process can end. These claims are further explained under Business Continuity, Risks and Financing Situation.

COVID-19

Covid-19 affected the Stockmann group sales in 2020, where the amount of the visitors dramatically decreased in physical stores. Both divisions managed to increase digital sales, but not fully compensating the physical store decline. In 2021 physical traffic partly recovered again in different pace for the sales markets. In beginning of 2022 there were still restrictions in some markets, which affected stores. Since April 2022 all restrictions have been eased up and sales has recovered. Compared with pre-pandemic in 2019, merchandise sales during the second quarter in 2022 have increased by 22.6% in the Lindex division but decreased by 4.7% in the Stockmann division. The decrease is although partly explained by less sales square meters than in 2019. For Stockmann group total merchandise sales has increased with 13.4% compared to 2019.

Half year financial report
This company announcement is a summary of Stockmann's Half year financial report for January – June 2022 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 on 22 July 2022 at 10:00 as a live webcast, that can be followed by this link. 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
Annelie Forsberg, CFO, tel. +46 706 43 00 59
Henna Tuominen, Director, Communications, CSR and IR, tel. +358 50 5705080

www.stockmanngroup.com

STOCKMANN plc

Jari Latvanen
CEO

Distribution:
Nasdaq Helsinki
Principal media