Stockmann Group’s Interim Report, 1 January - 30 September 2012
Steady growth in operating profit in the third quarter
Helsinki, Finland, 2012-10-31 07:00 CET (GLOBE NEWSWIRE) --
STOCKMANN plc, Interim Report 31.10.2012 at 8:00 EET
July - September 2012:
Consolidated revenue was up 5.2 per cent to EUR 485.1 million (EUR 461.3 million).
Operating profit was up 12.5 per cent to EUR 17.1 million (EUR 15.2 million).
January - September 2012:
Consolidated revenue was up 6.8 per cent to EUR 1 472.6 million (EUR 1 379.2 million).
Operating profit increased by EUR 19.7 million to EUR 30.5 million (EUR 10.8 million).
Profit for the period was 5.8 EUR million (EUR -14.4 million).
Earnings per share came to EUR 0.08 (EUR -0.20).
Full-year outlook unchanged: Revenue and operating profit expected to be above the figures for 2011, provided that the market sentiment does not significantly worsen.
CEO Hannu Penttilä:
The Stockmann Group’s revenue and operating profit continued to grow steadily in the third quarter of 2012. The strongest sales growth was achieved by Lindex, which gained market share in all markets except Norway. The growth was mainly due to the successful campaign against breast cancer that was carried out in September together with Missoni. As a result, Lindex posted a clear improvement in its earnings.
Seppälä was not as successful as it was in the third quarter of 2011. We are confident that the new organisational structure and the Fashion Chain Division that was established in June will help Seppälä’s operations become more profitable again. The brand renewal project which was started during the quarter is expected to have a positive impact on Seppälä’s operations in the coming years.
Stockmann’s department stores in Russia continued to perform well, with the St Petersburg flagship store leading the way. Operating profit improved again in Russia, despite the loss-making Bestseller operations which will be closed by the end of the year. The Baltic department stores also continued their good performance. Operating profit was lower than the previous year in Finland where there are signs of weakening consumer purchasing behaviour.
The Crazy Days campaign after the quarter continued to boost the Department Store Division’s revenue. We achieved a revenue growth of 8 per cent in total in the campaign, with 21 per cent growth in Russia and 3 per cent in the Baltic countries. In Finland the campaign was also launched online and this contributed to the growth in Finland reaching 3 per cent. The Group’s sales development in September and the Crazy Days campaign provide us with confidence for the important final months of the year. We are well positioned to achieve the targeted revenue and operating profit growth for the full year.
Stockmann is currently investigating two important projects in order to strengthen its financial position and implement its long-term strategy. Firstly, the company will investigate opportunities to issue a corporate bond on the credit market. With bond financing the company would diversify its sources of finance and maturity profile by replacing a part of its existing bank loans and credit facilities.
Secondly, Stockmann has successfully completed the construction of the Nevsky Centre shopping centre in St Petersburg, the operation of which is in full swing. The positive development of the Russian real estate market has encouraged Stockmann to evaluate the commercial value of the shopping centre and potentially strengthen the company’s financial position by finding an outside investor for the real estate property. If acceptable terms can be achieved, Stockmann could consider completing this transaction during 2013.
Outlook for the rest of 2012
The unstable state of the world economy and the unresolved European debt crisis create a challenging basis for assessing the future outlook, especially the long-term retail market development. There are indications of weakening consumer behaviour in particular in Finland, where consumers’ confidence in their own economy declined in the summer.
The Russian market is likely to continue to perform better than the Nordic countries, mainly provided that the price of oil does not drop significantly from its current level. The growth of consumer markets in the Baltic countries is expected to continue. However, high uncertainty and weakening consumer confidence may continue to affect consumers’ purchasing behaviour in all markets.
The market for affordable fashion developed poorly in 2011 and in the first half of 2012, particularly in Sweden. The market started to grow in September but the outlook for the rest of the year is still uncertain.
Stockmann’s decision to discontinue the loss-making Bestseller franchising operation during 2012 will have an impact on revenue in Russia, but will improve operating profit from 2013 onwards. Stockmann’s target is to achieve a positive operating profit, excluding Bestseller operations, in Russia in 2012.
During 2012, Stockmann will concentrate on gaining the full benefit of its recently completed capital expenditure projects as well as on the efficient use of capital. Additionally, attention will be given to improving cost efficiency in all units. The Group’s capital expenditure is estimated to be clearly lower than depreciation, and to amount to approximately EUR 50 million in 2012.
Stockmann expects the Group’s revenue and operating profit to be above the figures for 2011, provided that the market sentiment does not significantly worsen.
|Revenue, EUR mill.||485.1||461.3||1 472.6||1 379.2||2 005.3|
|Revenue growth, %||5.2||9.6||6.8||10.8||10.1|
|Gross margin, %||50.6||49.1||49.5||48.8||48.7|
|Operating profit, EUR mill.||17.1||15.2||30.5||10.8||70.1|
|Net financial costs, EUR mill.||7.5||8.8||23.8||26.3||34.4|
|Profit before tax, EUR mill.||9.6||6.4||6.8||-15.5||35.7|
|Profit for the period, EUR mill.||8.1||5.7||5.8||-14.4||30.8|
|Earnings per share, undiluted, EUR||0.11||0.08||0.08||-0.20||0.43|
|Equity per share, EUR||11.75||11.42||12.11|
|Cash flow from operating activities, EUR mill.||-32.4||-39.1||-17.5||-113.7||66.2|
|Capital expenditure, EUR mill.||17.6||11.4||40.9||50.4||66.0|
|Net gearing, %||111.0||119.2||95.3|
|Equity ratio, %||39.1||38.6||42.2|
|Number of shares, undiluted, weighted average, 1 000 pc||71 911||71 380||71 496|
Return on capital employed,
rolling 12 months
|Personnel, average||15 437||15 879||15 964|
This company announcement is a summary of Stockmann’s Interim Report Q3 2012 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 www.stockmanngroup.com.
Press and analyst briefing and conference call
A press and analyst briefing in Finnish will be held today, on 31 October 2012 at 9.15 a.m. at the F8 Tema restaurant on the 8th floor of Stockmann's Helsinki city centre department store, Aleksanterinkatu 52.
A conference call in English will be held today, on 31 October 2012 at 11.15 a.m. EET. To participate the conference call, please dial +358 9 8864 8511 and, when requested, key in the meeting room number *657899* including the asterisks. The presentation material will be available for downloading on the company's website from 9.15 a.m. EET onwards.
Stockmann has mandated Danske Bank, Pohjola Markets and Swedbank to arrange a series of investor meetings starting 6 November 2012. A capital markets transaction may follow, subject to market conditions.
Hannu Penttilä, CEO, tel. +358 9 121 5801
Pekka Vähähyyppä, CFO, tel. +358 9 121 3351
Q3 2012 ENG.pdf