Stockmann's outlook for 2016

Interim report 28.10.2016:

In the Stockmann Group’s main operating country, Finland, the general economic situation remains uncertain and only slow GDP growth is estimated. Consumers’ purchasing power is expected to remain low, and the development of the non-food retail market is likely to continue being weak. At the same time, competition is increasing.

The GDP growths for Sweden, Norway and the Baltic countries are estimated to be somewhat higher than in Finland. The affordable fashion market in Sweden is expected to remain relatively stable. In the Baltic countries, more competition is expected in the retail market.
Economic development in Russia is expected to remain weak in 2016. This has had a negative impact on the rental income from tenants in Stockmann’s real estate business.

Stockmann’s strategy aims at improving the Group’s long-term competitiveness and profitability through a comprehensive turnaround of its business. An efficiency programme was launched in February 2015 with an annual cost savings target of EUR 50 million. The programme is progressing according to plan, and its main effects will be reflected in Stockmann’s performance from 2016 onwards. The new organisational model which was taken into use in the third quarter, will reduce costs by approximately EUR 20 million during 2017.

Capital expenditure for 2016 is estimated to be approximately EUR 40-45 million which is less than the estimated depreciation for 2016.

Stockmann expects the Group’s revenue for 2016 to be down on 2015 due to on-going strategic actions in order to improve profita-bility. The adjusted operating result is expected to be slightly positive in 2016.