Stockmann's outlook for 2019
Financial Statements Bulletin 2018, published 14.2.2019:
In the Stockmann Group’s largest operating countries, Finland and Sweden, the general economic situations improved and the GDP growth as well as the consumer confidence development continued to be positive in 2018. In 2019, the retail growth is estimated to decline somewhat due to economic slowdown in Finland, but the growth is expected to continue in Sweden (source: Federation of Finnish Commerce, HUI Research).
Purchasing behaviour is changing due to digitalisation and increasing competition. E-commerce is expected to grow steadily, but the development in brick and mortar continues to be challenging. The retail industry is facing major structural challenges through digitalisation and further internationalisation.
In the Baltic countries, the outlook for the retail trade is expected to be better than that for the Stockmann Group’s other main market areas (source: OECD).
Stockmann continues its efforts to improve its performance and in January 2019 launched an initiative aimed at reducing the Group’s cost level by EUR 20 million by the end of 2019. In addition, the goal is to improve gross margin and accelerate strategic development projects that will deliver visible results to customers during the year. Of these measures, EUR 15 million will be allocated to Stockmann’s operations in Finland and the Baltic countries and EUR 5 million to Lindex, which will continue its profitability improvement programme.
In addition to operational performance improvements, reported EBITDA and the operating profit will improve due to a change in accounting principles when the new IFRS 16 Leases standard is taken into use as of 1 January 2019. The Group will apply the standard using the modified retrospective approach, which means that the comparative figures for 2018 will not be restated.
Capital expenditure for 2019 is estimated to be approximately EUR 35 million, which is less than the estimated depreciation for the year.
Guidance for 2019
Stockmann expects the Group’s adjusted operating profit, excluding the impact of Nevsky Centre, to improve compared to 2018.