Weaker outlook for Stockmann for 2013 – cost savings programme initiated to improve profitability
Helsinki, Finland, 2013-04-16 07:15 CEST (GLOBE NEWSWIRE) --
STOCKMANN plc, Company Announcement 16.4.2013 at 8:15 EET
The Stockmann Group’s revenue was lower than expected in the first quarter of 2013 in particular in Finland where the general retail market has been exceptionally weak. Stockmann’s first-quarter operating result is typically negative due to normal seasonal variation. This year the operating result in January-March will be significantly weaker than in the first quarter of 2012 and will amount to approximately EUR -34.5 million (1-3/2012: EUR -16.2 million, 1-3/2011: EUR -29.9 million).
The Department Store Division’s Crazy Days campaign in April achieved a new sales record. The campaign’s revenue was up by 10 per cent with growth in all market areas: Finland up 7 per cent (incl. online store), Baltics up 8 per cent and Russia up 16 per cent. Despite the excellent results of the campaign Stockmann expects the retail market in the Nordic countries to remain weak also during the rest of 2013. Consumers’ purchasing power is not growing, and the general cost level is estimated to increase.
As a consequence, Stockmann is launching a cost savings programme that will lower expenses from summer 2013 onwards. Despite the targeted savings, Stockmann will revise its profit guidance for the full-year 2013.
Revised profit guidance for 2013
Stockmann expects the Group’s revenue to increase in 2013, excluding the terminated franchising operations. Operating profit is estimated to not exceed the figure for 2012.
Earlier profit guidance for 2013 (Financial Statements Bulletin 13 February 2013):
Stockmann expects the Group’s revenue to increase in 2013, excluding the terminated franchising operations. Operating profit is expected to be higher than in 2012.
Targeting a more efficient cost structure
Stockmann’s cost savings programme aims to achieve savings from summer 2013 onwards and to improve the cost structure in the long run. As an immediate step, co-determination negotiations with the personnel will be started regarding temporary lay-offs. The proposal is to lay off all personnel in the Department Store Division in Finland and the Group Administration for 12 working days. The negotiations affect approximately 5 000 people and the target is to achieve savings of approximately EUR 7 million by summer 2014. The Department Store Division and the Fashion Chain Division have also begun other measures which aim to reduce fixed operating expenses by over EUR 10 million in 2013.
Planning for structural changes across the organisation will be started in the Department Store Division and the Group Administration, aiming at improving long-term efficiency in all support functions as well as in the sales organisations. These changes will result in cost savings from 2014 onwards. The impact of the structural changes on personnel and savings targets will be specified in stages, starting from autumn 2013. The Fashion Chain Division will continue to search for synergies and increase cost-effectiveness according to its previously announced plan.
Stockmann’s Interim Report for January-March 2013 will be published on Friday 26 April 2013.
Hannu Penttilä, CEO, tel. +358 9 121 5801
Nora Malin, Director, Corporate Communications, tel. +358 9 121 3558