Stockmann Group’s Interim Report 1 January - 30 September 2018
The Group’s adjusted operating result back to profit in Q3
STOCKMANN plc, Stock Exchange Release 26.10.2018 at 8:00 EET
July-September 2018, continuing operations:
- Consolidated revenue was EUR 232.5 million (242.0), up 0.3% in comparable currency rates.
- Gross margin was 58.7% (56.2).
- Adjusted operating result was EUR 5.9 million (-1.4).
- Reported operating result was EUR -4.9 million (-151.4), including a value adjustment of EUR -10.8 million related to Nevsky Centre.
January-September 2018, continuing operations:
- Consolidated revenue was EUR 714.3 million (740.1).
- Gross margin was 57.5% (55.3).
- Adjusted operating result was EUR 4.9 million (-12.0).
- Reported operating result was EUR -2.2 million (-162.0).
- Adjusted earnings per share were EUR -0.47 and reported earnings per share were EUR -0.56 (-2.64).
Revenue guidance updated mainly due to weakening currency rates, profit guidance for 2018 unchanged:
Stockmann expects the Group’s revenue for 2018 to decline from the previous year. Adjusted operating profit is expected to improve in 2018.
CEO Lauri Veijalainen:
The Stockmann Group’s performance improved further in the third quarter, and the adjusted operating result was over EUR 7 million higher than that of the previous year, when the result was negative. Our strategic actions are producing results and we are moving forward.
In the third quarter, Lindex’s sales and profitability continued to increase due to a strong start to the autumn season and Lindex increased its market share in its main markets. The adjusted operating result nearly doubled due to higher sales, improved gross margin and cost savings measures.
In Stockmann Retail the operating result improved slightly but was still negative. The gross margin continued to improve, and costs were reduced in the support functions. The ongoing digital projects have advanced well: The Click & Collect service point which is open every day until midnight was opened in the Helsinki department store and the online selection has grown significantly. We announced the launch of a new marketplace that will take place in the spring of 2019, which will open our digital doors to partners and broaden our selection further.
In the Crazy Days campaign, which took place after the quarter in October, sales were down by 9% from the previous year in total. The online store had strong growth of 7%, but sales in the Finnish and Baltic brick & mortar stores were below the previous year’s level..
Real Estate continued its stable performance. In October an agreement was signed to divest the Nevsky Centre property.
The full focus is now on the final months of the year and we will put all our efforts into achieveing a good Christmas sales and a solid fourth quarter. Due to the weakening of the Swedish krona, our reported revenue for 2018 will be lower than earlier estimated. However, our profit guidance for 2018 remains unchanged, and we expect the adjusted operating profit to improve in 2018.
KEY FIGURES
| Continuing operations | 7-9/ 2018 |
7-9/ 2017 |
1-9/ 2018 |
1-9/ 2017 |
1-12/ 2017 |
| Revenue, EUR mill. | 232.5 | 242.0 | 714.3 | 740.1 | 1 055.9 |
| Gross margin, % | 58.7 | 56.2 | 57.5 | 55.3 | 55.8 |
| EBITDA, EUR mill. | 9.0 | 14.0 | 39.8 | 33.4 | 67.6 |
| Adjusted EBITDA, EUR mill. | 19.8 | 14.0 | 46.8 | 33.4 | 73.2 |
| Operating result (EBIT), EUR mill. | -4.9 | -151.4 | -2.2 | -162.0 | -148.4 |
| Adjusted operating result (EBIT), EUR mill. | 5.9 | -1.4 | 4.9 | -12.0 | 12.3 |
| Net financial items, EUR mill.* | -7.8 | -4.8 | -25.4 | -20.1 | -31.1 |
| Result before tax, EUR mill. | -12.7 | -156.2 | -27.6 | -182.1 | -179.5 |
| Result for the period, EUR mill. | -13.8 | -158.0 | -36.7 | -186.0 | -198.1 |
| Earnings per share, undiluted and diluted, EUR |
-0.21 | -2.21 | -0.56 | -2.64 | -2.82 |
| Personnel, average | 7 487 | 7 677 | 7 258 | 7 371 | 7 360 |
| Continuing and discontinued operations** | 7-9/ 2018 |
7-9/ 2017 |
1-9/ 2018 |
1-9/ 2017 |
1-12/ 2017 |
| Net earnings per share, undiluted and diluted, EUR |
-0.21 | -2.25 | -0.56 | -2.78 | -2.98 |
| Cash flow from operating activities, EUR mill. | 4.0 | -29.9 | 21.9 | -59.7 | 25.9 |
| Capital expenditure, EUR mill. | 6.0 | 8.5 | 21.1 | 24.2 | 34.7 |
| Equity per share, EUR | 11.72 | 12.09 | 12.29 | ||
| Net gearing, % | 74.4 | 95.0 | 83.8 | ||
| Equity ratio, % | 44.9 | 41.9 | 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, % | 0.7 | -7.5 | -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 | 7-9/ 2018 |
7-9/ 2017 |
1-9/ 2018 |
1-9/ 2017 |
1-12/ 2017 |
| Adjusted EBITDA | 19.8 | 14.0 | 46.8 | 33.4 | 73.2 |
| Adjustments to EBITDA | |||||
| Restructuring arrangements | -3.2 | -9.6 | |||
| Fair value gains and losses on investment properties |
4.0 | ||||
| Gain on sale of properties | 7.0 | ||||
| Value adjustment to assets held for sale | -10.8 | -10.8 | |||
| Adjustments total | -10.8 | -7.1 | -5.6 | ||
| EBITDA | 9.0 | 14.0 | 39.8 | 33.4 | 67.6 |
| EUR million | 7-9/ 2018 |
7-9/ 2017 |
1-9/ 2018 |
1-9/ 2017 |
1-12/ 2017 |
| Adjusted operating result (EBIT) | 5.9 | -1.4 | 4.9 | -12.0 | 12.3 |
| Adjustments to EBIT | |||||
| Lindex goodwill impairment | -150.0 | -150.0 | -150.0 | ||
| Restructuring arrangements | -3.2 | -14.6 | |||
| Fair value gains and losses on investment properties |
4.0 | ||||
| Gain on sale of properties | 7.0 | ||||
| Value adjustment to assets held for sale |
-10.8 | -10.8 | |||
| Adjustments total | -10.8 | -150.0 | -7.1 | -150.0 | -160.6 |
| Operating result (EBIT) | -4.9 | -151.4 | -2.2 | -162.0 | -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 the GDP growth has continued in 2018. Consumer confidence has also continued its positive development. A similar development is expected for the rest of the year.
However, purchasing behaviour is changing due to digitalisation and increasing competition. This is reflected in the outlook for the fashion market in Finland and Sweden, 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 in the beginning of 2018, have mostly been implemented and they will be fully visible in the 2019 operating costs.
Capital expenditure for 2018 is re-estimated to be approximately EUR 35 million, which is less than the estimated depreciation for the year.
GUIDANCE FOR 2018
Stockmann expects the Group’s revenue for 2018 to decline on the previous year (updated). Adjusted operating profit is expected to improve in 2018 (unchanged).
Earlier 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.
Interim report
This company announcement is a summary of the Stockmann's Interim report for 1 January – 30 September 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 26 October 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. The recording and presentation material are available on the company's website after the event.
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