Stockmann Group’s Interim Management Statement, 1 January – 30 September 2022

Robust revenue growth for the Stockmann Group and Stockmann division’s adjusted operating result reached break even

STOCKMANN plc, Interim report, 28.10.2022 at 8:00 EET

July–September 2022:
- Stockmann Group’s revenue increased to EUR 244.0 million (237.8), up by 4.2% in local currencies.
- Gross margin decreased to 56.8% (59.5).
- The adjusted operating result was EUR 22.0 million (32.9).
- Operating result was EUR 6.0 million (32.7).
- Earnings per share were EUR 0.00 (0.15).
- Net result for the quarter amounted to EUR 0.6 million (22.9).

January–September 2022:
- Stockmann Group’s revenue increased to EUR 709.1 million (621.5), up by 15.4% in local currencies.
- Gross margin decreased to 58.1% (59.1).
- The adjusted operating result was EUR 53.7 million (38.6).
- Operating result improved to EUR 130.3 million (31.5).
- Earnings per share were EUR 0.54 (0.13).
- Net result for the period amounted to EUR 84.1 million (12.6).

Guidance for 2022 (unchanged):
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.

Market outlook for 2022:
Uncertainty in the global economy is expected to persist throughout 2022. The geopolitical instability will affect the supply chains and international logistics 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. Additionally, the accelerating inflation has an impact on households and consumption and will also lead to increased operating costs. The retail market is expected to remain challenging due to changes in consumer behaviour and confidence.

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

CEO Jari Latvanen:
Stockmann Group’s robust growth in the third quarter is a great achievement in the challenging market conditions within the retail sector. Both divisions increased physical and digital sales in local currencies, thanks to higher number of visitors and increased average purchases.

The Stockmann division improved the gross margin despite higher costs of purchases, while Lindex’s gross margin decreased due to the unfavourable U.S. dollar to Swedish crown exchange rate. To continue growing and maintain a good customer value-based pricing, the currency increase has not been fully implemented to consumer end prices. In addition, Lindex’s other costs have increased due to higher investments within digitalisation and strategic growth expenses for new brands and due to a more normal operational environment without the pandemic’s effects or subsidies.

The third quarter’s adjusted operating result decreased compared to a year ago. The Stockmann division delivered a positive adjusted operating result that was above last year due to higher sales. Lindex continues to deliver good results, but the extraordinarily good operating result from last year could not be reached owing to strategic growth expenses, unfavourable exchange rates and more normalised costs.

The operating result was affected by a provision for prudential reasons of EUR 15.9 million, due to the arbitration decision related to LähiTapiola Keskustakiinteistöt Ky. The provision is recognised as an item affecting comparability in the income statement. 

During the third quarter, the Group’s cash flow was affected by significant capital expenditure when construction of Lindex’s new omnichannel warehouse commenced. The cash flow from ordinary operations was good, but was affected by higher inventories due to longer lead times and preparing for Christmas season. The Group’s liquidity remained strong and excluding lease liabilities and the bond there is no interest-bearing debt.

Our systematic implementation of sustainability initiatives and digital development is proceeding well in both divisions. We have strongly committed teams and I would like to thank them all for their good work.

KEY FIGURES

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

* Net profit/loss for the period – adjustments after tax impact / average number of shares, adjusted for share issue

CORPORATE RESTRUCTURING PROGRAMME

The restructuring process is proceeding according to plan, which means that all Stockman’s department store properties have been sold and all interest-bearing debt has been paid except for the bond of EUR 67.5 million. 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 classified restructuring debt was also 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’s sales in 2020, when the number of visitors dramatically decreased in physical stores. During 2020 both divisions managed to increase digital sales, but this did not fully compensate the decline in sales in the physical stores. In 2021 physical traffic partly recovered again at different speeds in the sales markets. At the beginning of 2022 there were still restrictions in some markets, which affected stores. Since April 2022 all restrictions have been eased up and sales have recovered. Compared with pre-pandemic levels in 2019, merchandise sales during the third quarter in 2022 have increased by 13.8% in the Lindex division and by 4.5% in the Stockmann division.

Interim Management Statement
This company announcement is a summary of the Stockmann's Interim Management Statement for 1 January – 30 September 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.

Press and analyst briefing & webcast
A press and analyst briefing will be held in English today, on 28 October at 10:00 a.m. EET in the Stockmann Lounge on the 4A floor in Stockmann’s Helsinki city centre department store, entrance from the F staircase on the Pohjoisesplanadi side. The event can also be followed as a live webcast by this link. The recording and presentation material will be 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
 

www.stockmanngroup.com

STOCKMANN plc

Jari Latvanen
CEO

Distribution:
Nasdaq Helsinki
Principal media