STOCKMANN'S CAPITAL MARKETS DAY 2011: UPDATE ON STRATEGY AND OPERATIONS

Helsinki, Finland, 2011-09-07 09:30 CEST (GLOBE NEWSWIRE) -- STOCKMANN plc, Company Announcement 7.9.2011 at 10:30 EET

The Stockmann Group will present today, on 7 September 2011, further information on the Group’s strategy and an update on business operations at its Capital Markets Day in St Petersburg, Russia.

Stockmann has invested heavily in its competitiveness during the past five years. In 2007 the company acquired the fashion chain Lindex. Two major construction projects took place between 2006 and 2010: the enlargement and renovation of Helsinki city centre department store and the building of Nevsky Centre shopping centre in St Petersburg after acquiring a commercial plot in the city centre in 2006.

In the coming strategy period 2012 - 2016, the focus will shift to utilising the full potential of existing assets after this substantial investment program. The Department Store Division will concentrate on improving its profitability and further strengthening the Stockmann brand position as the leading department store in each of its operating markets. The fashion companies Lindex and Seppälä will continue improving their market positions and expanding mainly in the countries where they currently operate.

Operating profit for Russia targeted to be positive in 2012

Stockmann has operated in Russia since 1989 when its first stores were opened in Moscow. Today Stockmann has seven department stores, one shopping centre and 83 fashion stores in Russia, and 16% of the Group’s revenue in Q2 2011 was coming from this market. Due to the significant investment programme, unexpected closing of the main department store Smolenskaya in Moscow in 2008, and the impact of the financial crisis in 2008 and 2009, Stockmann’s operations in Russia have been loss-making since 2007 and will continue so for the full-year 2011. The last quarter of 2011 is estimated to be clearly positive for Russia. In 2012 the full-year operating profit for Russia is targeted to be positive. Operations in Russia will continue as a key focus area for the Group.

Capital expenditure in 2012 - 2014 to be clearly below depreciation

The Stockmann Grop’s capital expenditure in 2011 is expected to be around approximately EUR 70 million which is below the estimated depreciation for the full year. In the coming years, capital expenditure is expected to be less than in 2011, at approx. EUR 50 - 60 million annually. Depreciation in the same years is estimated to be approx. EUR 70 - 75 million annually. Increased focus will be put on the use of capital, inventories, and costs.

The planned capital expenditure projects for the coming years will be enlargements and renovations of current department stores such as in Tampere and Tapiola, which have been disclosed earlier. Stockmann sees also opportunities for enlargements in some of its other department stores. Expansion of the Group’s fashion chains, Lindex and Seppälä, will continue. The estimated number of new stores will be 15 - 20 annually in 2012 and 2013.

Bestseller franchising in Russia to end by 31 December 2012

Stockmann and Bestseller A/S have agreed to end the franchising co-operation in Russia latest on 31 December 2012. Ending the Bestseller franchising business is estimated not to have a substantial effect on the Stockmann Group’s earnings and it will enable Stockmann Department Store Division to focus on its core business. The Bestseller franchising in Russia has been loss-making for Stockmann every year since it started in 2005.

Stockmann is currently operating 20 Bestseller stores in Russia. Bestseller will take responsibility for running the store operations there when the franchising agreement ends. Stockmann will continue its long-term cooperation with Bestseller in its department stores.

Outlook for the rest of 2011 unchanged

The Stockmann Group’s outlook for 2011 remains unchanged but achieving the challenging target requires that there will be no significant slowdown in the economic growth for the rest of 2011. Stockmann expects its revenue to continue to grow for the rest of the year. Operating profit for the second half of 2011, and especially its final quarter, is estimated to outperform the previous year. The Group targets the full-year operating profit to be up on the previous year.

Capital Markets Day materials
The presentation material for Stockmann’s Capital Markets Day is available at around 11.00 EET on 7 September on the company's website at www.stockmanngroup.fi.

Further information:
Hannu Penttilä, CEO, tel. +358 9 121 5801

www.stockmanngroup.fi



STOCKMANN plc

Hannu Penttilä
CEO



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