STOCKMANN plc STOCK EXCHANGE RELEASE April 27, 2004, at 11.45


The Stockmann Group's sales grew by 5.6 per cent to EUR 402.9 million (EUR 381.4 million in 2003). Profit on ordinary operations improved by EUR 5.1 million. The Department Store Division, Vehicle Division and Seppälä Division reported higher operating profits and the Hobby Hall Division's operating profit was on a par with the same period a year ago. Profit before extraordinary items was EUR 4.8 million. The corresponding figure a year earlier, EUR 12.5 million, included EUR 12.8 million of other operating income. The earnings estimate for 2004 is unchanged.

Sales and result

Stockmann's consolidated sales in the first quarter of 2004 were EUR 402.9 million, up EUR 21.5 million and 5.6 per cent on same-period sales. Net turnover was EUR 336.0 million, increasing by 5.4 per cent on the comparison period.

The gross margin on the Group's operations grew by EUR 9.9 million to EUR 103.1 million. The relative gross margin on operations improved in all the divisions and was 30.7 per cent (29.2 per cent). Operating costs increased by EUR 5.7 million and depreciation by EUR 0.2 million. Profit on ordinary operations increased by EUR 4.0 million and, in addition, net financial income increased by EUR 1.1 million. These factors improved profit on ordinary operations before extraordinary items by a total of EUR 5.1 million on the same period a year earlier. There was no other operating income in the report period. In the comparison period, other operating income of EUR 12.8 million was obtained from the disposal of the Tapiola department store property. Accordingly, consolidated operating profit diminished by EUR 8.8 million.

Net financial income increased by EUR 1.1 million to EUR 3.1 million thanks to the rise in liquid assets and gains on foreign exchange.

Consolidated profit before extraordinary items was EUR 4.8 million, down EUR 7.7 million on the result a year earlier. Direct taxes were EUR 1.4 million, decreasing by EUR 2.3 million on the figure a year earlier. Net profit for the report period was EUR 3.4 million, compared with EUR 8.9 million a year earlier.

Earnings per share were EUR 0.06 (EUR 0.17). Equity per share was EUR 9.08 (EUR 9.45).

Sales and earnings trend by division

The Department Store Division's sales grew by 8 per cent to EUR 199.6 million. Sales in Finland grew by 5 per cent, boosted in part by the first day of the Crazy Days campaign, which came on the last day of March, unlike in the comparison period. Then again, sales were reduced by the transfer of Academic Bookstore's magazine business to Suomalainen Kirjakauppa in June 2003. Sales in Russia grew both in rouble and euro terms. In Russia, Stockmann went over to rouble pricing from its previous dollar-based pricing towards the end of January 2004. The positive trend in operations in Russia was attributable partly to a lowering of the value added tax and the abolishment of sales tax at the beginning of the year. Sales in Estonia also grew. Sales by International Operations were furthermore lifted by the Riga department store, which was opened in Latvia in October 2003. Sales by International Operations grew by 26 per cent and their share of the division's sales rose to 18 per cent (15 per cent). The Department Store Division's operating profit increased by EUR 2.5 million to EUR 0.7 million (a loss of EUR 1.8 million in Jan.-Mar. 2003). Earnings were burdened by the pre-opening costs of the Mega South department store that was opened in Moscow on April 17, 2004, as well as the costs of starting up the Riga department store.

Following the exceptionally strong growth in vehicle sales in 2003 after the car tax was lowered, the growth in vehicle sales in Finland evened out in the first part of 2004. The Vehicle Division's sales grew by 4 per cent to EUR 117.9 million. Unit sales of new vehicles fell by 8 per cent and those of used vehicles grew by 6 per cent. Stockmann's market share of the motor trade in the Helsinki metropolitan area decreased slightly. The division's operating profit improved and was EUR 1.9 million (EUR 1.7 million).

The Hobby Hall Division's sales totalled EUR 56.6 million (EUR 57.8 million). Despite the decrease in the overall distance retail market, Hobby Hall's distance retail sales grew by 5 per cent in Finland. Online sales showed especially strong growth. Sales in Finland nevertheless were down one per cent on the previous year because the figure for the comparison year includes the sales of three stores that were closed. The division's sales abroad were down 7 per cent on the same period of 2003. This was attributable to tightened up credit policy as well as the closing of one store in Estonia at the end of 2003. The division's operating result was at the previous year's level and was a loss of EUR 0.7 million. The relative gross margin improved slightly on the comparison period. The profitability-boosting measures that were launched towards the end of 2003 have fed through into expenses and the gross margin according to plan. They will improve the gross margin further in the second quarter.

The Seppälä Division's sales increased by 9 per cent on the first quarter of 2003 and were EUR 28.6 million. Seppälä's sales grew both in Finland and the Baltic countries, where sales were lifted by the stores opened in Latvia towards the end of 2003. Thanks to higher sales and an improved relative gross margin, Seppälä's operating result increased by EUR 1.1 million and was a loss of EUR 0.8 million (a loss of EUR 1.9 million). Owing to good stock and category management, Seppälä achieved a further improvement in the relative gross margin.

Financing and invested capital

Liquid assets amounted to EUR 88.6 million at the end of the report period, as against EUR 59.6 million a year earlier and EUR 121.3 million at the end of 2003.

Loan repayments were not made during the report period, nor have new long- term loans been drawn down. The amount of long-term loans at the end of March was EUR 49.2 million. Capital expenditures came to a total of EUR 17.6 million. The increase in working capital from the beginning of the year to the end of March was EUR 27.8 million. This increase was attributable primarily to larger stocks and trade debtors for the new department stores in Riga and Moscow. Subscriptions made by exercising the 1997 share options added EUR 0.3 million to shareholders' equity in January. The dividend for 2003 according to the resolution of the Annual General Meeting on March 30, 2004, a total of EUR 70.5 million, was paid out in mid-April. In the Interim Report it is treated as a dividend and a liability to the company's shareholders. As a result of this, the equity ratio declined to 59.9 per cent from 68.3 per cent at the end of 2003. At the end of the comparison period the equity ratio was 63.5 per cent.

The return on capital employed over the past 12 months diminished in line with the decrease in earnings and was 13.0 per cent (15.2 per cent). The Group's capital employed increased from March of the previous year, notably because of the capital invested in the new department stores in Riga and Moscow, and amounted to EUR 545.9 million at the end of the report period (EUR 538.5 million). Invested capital was reduced owing to the growth in the dividend liability from EUR 45.9 million to EUR 70.5 million due to larger dividends than last year.

Capital expenditures

Capital expenditures during the report period totalled EUR 17.6 million (EUR 6.0 million).

The Department Store Division's capital expenditures in the report period came to EUR 13.1 million. The division's most important investment outlay was for the new Mega South department store in Moscow that operates in premises leased from Ikea and was opened on April 17. Its operations have got off to a very good start. During the report period the department store required an outlay of EUR 11.4 million. The department store has approximately 10 000 square metres of retail space, and Stockmann's capital expenditure for the site is about EUR 19.0 million. In Moscow the landlord is also carrying out construction works on the Mega North department store which will have about 10 000 square metres of retail space too. According to plans, it will be opened at the end of 2004 in premises owned by Ikea. Stockmann's share of the capital expenditure for this site too will come to slightly less than EUR 20 million. In Russia, interior decorating work on the second Zara store is in progress. The store will be opened at the end of May right near the centre of Moscow. A Zara store will be opened in the Mega North Shopping Centre towards the end of the year. The seventh store in the Stockmann Beauty cosmetics chain was opened in Kuopio in March.

The Hobby Hall Division's capital expenditures in the report period totalled EUR 0.4 million. They went mainly for the development of information systems.

Seppälä's capital expenditures in the report period came to EUR 0.2 million. Seppälä opened its first store in Russia at the Stockmann department store in Moscow's Mega South Shopping Centre on April 17. Seppälä's sales in Moscow have also got off to a very good start. Seppälä is going to open a store in Moscow's Mega North Shopping Centre for the Christmas trade in 2004.

Investments in real-estate property during the report period totalled EUR 3.6 million, of which EUR 2.1 million went for the Audi showroom that will be used by the Vehicle Division in Espoo's Suomenoja district and EUR 0.5 million was spent on preparatory works for the enlargement of the Helsinki department store. The Audi showroom will be realized by enlarging the Stockmann-owned building that is used by the Vehicle Division. According to plans, the Audi showroom that will serve the Helsinki metropolitan area and its environs will go into operation in summer 2004.

Other capital expenditures in the report period amounted to EUR 0.4 million.

Current projects

Stockmann has signed an agreement on opening a department store with about 11 000 square metres of retail space in leased premises in the new section of the Jumbo Shopping Centre in Vantaa. The target completion date for the department store is in time for the Christmas market in 2005.

A large-scale project for enlargement and modification works on the department store in the centre of Helsinki is pending. According to the plan, the department store's commercial premises will be expanded by about 10 000 square metres by converting existing premises to commercial use and by building new retail space. In addition, completely new goods handling and maintenance areas will be built as well as access passages to the new customer car-park. After the enlargement the Helsinki department store will have about 50 000 square metres of retail sales space. The project has a total cost estimate of about EUR 115 million. Implementation of the project will call for modifying the town plan, a process that has already been started.

Stockmann has made an agreement with VV-Auto Oy, which is owned by Kesko Corporation, on termination of the lease agreement for the VW-Audi car dealership in Helsinki's Herttoniemi district by December 31, 2004 at the latest.

The Hobby Hall Division will centralize its Latvian and Lithuanian functions in Latvia during autumn 2004.

A change in the organization

Klaus Sundström (53), M.Sc. (Econ.), has been appointed the new director of Stockmann's Vehicle Division and a member of the Group's Management Committee, effective April 2, 2004. The division's previous director, Esa Mäkinen, will join another company.

Annual General Meeting

The Annual General Meeting held on March 30 resolved that a dividend of EUR 0.90 per share is to be paid for the 2003 financial year as well as a bonus dividend of EUR 0.45 per share, or a total of EUR 1.35 per share. The total dividend payout amounted to EUR 70.5 million.

The Annual General Meeting approved the Board of Directors' proposal for amending the provision concerning the term of office of a member of the Board of Directors as set out in Article 5 of the Articles of Association such that the members of the Board of Directors are to be elected for one year at a time.

The Annual General Meeting resolved, in accordance with the proposal of the Board's Appointments and Compensation Committee, that seven members be elected to seats on the Board and re-elected from among the Board's present members Lasse Koivu, managing director, Föreningen Konstsamfundet r.f.; Erkki Etola, managing director, Oy Etola Ab; Professor Eva Liljeblom; Kari Niemistö, managing director, Oy Selective Investor Ab; Christoffer Taxell, LL.M., and Henry Wiklund, managing director, Svenska litteratursällskapet i Finland r.f. for a term of office up to the end of the next Annual General Meeting. Following the notification of Erik Anderson, LL.M., that he did not wish to stand for election, Carola Teir- Lehtinen, Senior Vice President, Corporate Communications, Fortum Corporation, was elected a new member in accordance with the Committee's proposal.

At its organization meeting on March 30, 2004, the Board of Directors re- elected Lasse Koivu chairman and Erkki Etola vice chairman.

Re-elected as regular auditors were Wilhelm Holmberg, Authorized Public Accountant, and Henrik Holmbom, Authorized Public Accountant. KPMG Wideri Oy Ab continues to act as the deputy auditor.

The Annual General Meeting passed a resolution to authorize the Board of Directors to decide on transferring a maximum of 413 000 of the company's own Series B shares (treasury shares) in one or more instalments. The authorization will be valid for one year.

Shares and shareholders

The company's market capitalization at the end of March was EUR 941.1 million (EUR 705.2 million). At the end of 2003, the market capitalization was EUR 955.6 million.

Stockmann's shares underperformed both the HEX All-Share Index and the HEX Portfolio Index during the report period. At the end of March the stock exchange price of the Series A share was EUR 17.79, compared with EUR 18.00 at the end of 2003, and the Series B share was selling at EUR 17.95, as against EUR 18.30 at the end of 2003.

The 1997 Stockmann share options were exercised to subscribe for a total of 20 300 Stockmann plc Series B shares with a par value of 2 euros in January. As a consequence of the subscriptions, the share capital was increased by EUR 40 600. Following the increase the share capital is 105 299 282 euros. The shares were entered in the Trade Register on February 20, 2004, and they became available for public trading, together with the old shares, on Helsinki Exchanges on April 5, 2004.

At its meeting held on February 12, 2004, Stockmann plc's Board of Directors approved a shareholder's request to convert 163 000 of the company's shares from Series A into Series B shares in accordance with Article 3 of the Articles of Association. The share conversion was entered in the Trade Register on February 20, 2004. The converted shares became eligible for public trading together with the old shares as from February 23, 2004. Following the share option subscriptions and the share conversion, the total number of Series A shares is 24 575 893 and the number of Series B shares is 28 073 748.

Stockmann held 413 000 of its own Series B shares at the end of March 2004. The nominal value of these shares is a total of EUR 826 000, and they represent 0.8 per cent of all the shares outstanding as well as 0.2 per cent of the total votes. The shares were purchased for a total price of EUR 6.2 million.

The company's Board of Directors does not have valid authorizations to increase the share capital or to float issues of convertible bonds or bonds with warrants or to buy back its own shares.

Personnel strength

During the report period the Stockmann Group had an average payroll of 8 652 employees, or 462 more than in the comparison period. The growth in the number of employees was attributable mainly to the new department stores in Riga and Moscow. Converted to full-time staff, the average number of employees increased by 466 and was 7 092.

At the end of March 2004 the number of staff working abroad was 2 073 people. At the end of March 2003, Stockmann had 1 434 people working abroad.

Full-year outlook

Retail sales, including the motor trade, are estimated to grow further in Finland. The economies of Russia and the Baltic countries are anticipated to continue growing at a faster rate than the Finnish economy. The Stockmann Group's sales growth is estimated to outpace the overall market growth. Sales in 2004 are estimated to top EUR 1.8 billion.

The Group's second-quarter profit on ordinary operations is anticipated to improve on the previous year's figure. The operating profit figures for the Department Store Division, Hobby Hall Division and Seppälä Division are estimated to increase from the second quarter of 2003, with the Vehicle Division's operating profit at the level of the comparison period. The earnings estimate for 2004, which was stated in the Annual Report, is unchanged. Stockmann's target is for profit before extraordinary items in 2004 to be higher than the figure reported for 2003.

Helsinki, April 27, 2004


Profit and loss account, Group EUR millions

1-3/04 1-3/03 Change % 1-12/03

Net turnover336.0318.751 412.7
Other operating income0.012.8-10015.4
Raw materials and services232.9225.53955.3
Staff expenses47.846.04194.9
Other operating expenses46.342.49183.4
Operating profit1.610.5-8465.7
Financial income and expenses,3.12.0538.3
Profit before extraordinary items4.812.5-6274.0
Extraordinary items0.00.00.0
Profit before taxes4.812.5-6274.0
Direct taxes (corresponding to1.43.6-6222.3
profit before taxes)
Minority interest0.00.00.0
Profit for the period3.48.9-6251.7
Earnings per share, EUR0.060.17-651.01
Earnings per share, diluted, EUR0.060.17-651.00
Equity per share, EUR9.089.45-410.36
Return on equity, %,9.511.69.6
moving 12 months Return on investment, %, 13.0 15.2 13.2 moving 12 months Average number of employees, 7 092 6 626 7 7 068 converted to full-time staff

Sales by division, EUR millions

1-3/04 1-3/03 Change % 1-12/03

Department Store Division199.6184.08851.3
Vehicle Division117.9113.24480.4
Hobby Hall56.657.8-2235.7
Real Estate5.05.2-219.7
Total402.9381.461 698.6
Net turnover by division, EUR millions

1-3/04 1-3/03 Change % 1-12/03

Department Store Division167.8155.48713.2
Vehicle Division96.893.14394.5
Hobby Hall47.348.3-2197.3
Real Estate5.45.7-521.0
Total336.0318.751 412.7
Operating profit by division, EUR millions

1-3/04 1-3/03 Change % 1-12/03

Department Store Division0.7-1.839.7
Vehicle Division1.91.7135.6
Hobby Hall-0.7-0.7-3.4
Real Estate3.84.2-1114.5
Other operating income0.012.8-10015.4
Capital expenditures, gross, by division, EUR millions

1-3/04 1-3/03 Change % 1-12/03

Department Store Division13.13.428518.2
Vehicle Division0.30.6-541.8
Vehicle Division's leasing assets0.0-0.3-87-0.6
Hobby Hall0.40.2811.7
Real Estate3.61.612916.8
Funds statement, Group EUR millions

1-3/04 1-3/03 1-12/03 Cash flow from operations -14. -3.9 72.2 3 Cash flow into and from investments

   Capital expenditures-18.2-3.0-41.1
   Cash from non-current assets0.0-1.837.3
Cash flow into and from investments, total-18.1-4.8-3.8
Financial cash flow
   Subscriptions with options0.316.4
   Dividend paid0.00.0-45.8
   Change in long-term loans-1.012.6
   Change in short-term loans-0.5-1.2-0.8
Financial cash flow, total-0.2-2.2-17.6
Change in cash funds-32.7-10.950.8
Cash funds at start of the period121.370.570.5
Cash funds at end of the period88.659.6121.3
Balance sheet, Group EUR millions

31.3.04 31.3.03 31.12.03 Non-current assets

   Intangible assets50.336.140.4
   Tangible assets220.5212.0220.2
Current assets
   Debtors, interest-bearing109.6111.7111.4
   Debtors, non-interest-bearing86.798.587.7
   Liquid funds88.659.6121.3
Capital and reserves480.4487.9547.1
Minority interest0.00.00.0
Deferred tax liability25.923.326.0
Non-current creditors49.235.048.6
Current creditors, interest-bearing16.315.716.0
Current creditors, non-interest-bearing229.8206.9163.0
Equity ratio, %59.963.568.3
Gearing, %-4.8-1.8-10.4
Cash flow from operations per share, EUR-0.27-0.081.41
Interest-bearing net debt, EUR mill.-132.5-120.6-168.0
Number of shares at March 31, 2004,52 65051 38452 629
thousands Weighted average number of shares, thousands 52 823 50 971 51 111

Contingent liabilities, Group EUR millions

31.3.04 31.3.03 31.12.03

Mortgages on land and buildings1.73.41.7
Other commitments56.763.059.1
Lease agreements on business premises, EUR millions

31.3.04 31.3.03 31.12.03 Minimum rents payable on the basis of binding lease agreements on business premises

Within one year60.148.754.1
After one year405.6330.9417.0
Derivative instruments

31.3.04 31.3.03 31.12.03 Nominal value

Foreign exchange derivatives72.89.911.7
Interest rate derivatives35.035.035.0
Fair value
Foreign exchange derivatives-0.10.0-0.1
Interest rate derivatives-1.0-1.3-0.9
Derivatives have been made for hedging purposes.

Profit and loss account, Group quarterly, EUR millions

Q1/04 Q4/03 Q3/03 Q2/03

Net turnover336.0418.1327.7348.3
Other operating income0.
Raw materials and services232.9270.7221.1237.9
Staff expenses47.855.944.248.9
Other operating expenses46.351.845.244.0
Operating profit1.632.110.113.1
Financial income and expenses,
Profit before extraordinary items4.834.611.615.3
Extraordinary items0.
Profit before taxes4.834.611.615.3
Direct taxes (corresponding to1.410.93.44.4
profit before taxes)
Minority interest0.
Profit for the period3.423.78.310.8
Earnings per share, EUR
Profit and loss account, Group quarterly, EUR millions

Q1/03 Q4/02 Q3/02 Q2/02

Net turnover318.7391.8306.7319.2
Other operating income12.
Raw materials and services225.5249.2207.6212.1
Staff expenses46.055.140.745.4
Other operating expenses42.447.641.541.3
Operating profit10.532.79.720.2
Financial income and expenses,
Profit before extraordinary items12.534.811.221.2
Extraordinary items0.
Profit before taxes12.534.811.221.2
Direct taxes (corresponding to3.
profit before taxes)
Minority interest0.
Profit for the period8.925.77.915.0
Earnings per share, EUR
Sales by division, EUR millions

Q1/04 Q4/03 Q3/03 Q2/03

Department Store Division199.6276.2192.4198.6
Vehicle Division117.9114.9115.1137.2
Hobby Hall56.670.154.453.5
Real Estate5.
Sales by division, EUR millions

Q1/03 Q4/02 Q3/02 Q2/02

Department Store Division184.0258.0183.4188.1
Vehicle Division113.2103.498.5106.4
Hobby Hall57.870.253.556.2
Real Estate5.
Net turnover by division, EUR millions

Q1/04 Q4/03 Q3/03 Q2/03

Department Store Division167.8230.8160.9166.0
Vehicle Division96.894.394.5112.6
Hobby Hall47.359.145.344.6
Real Estate5.
Net turnover by division, EUR millions

Q1/03 Q4/02 Q3/02 Q2/02

Department Store Division155.4214.7153.7157.1
Vehicle Division93.
Hobby Hall48.358.744.746.9
Real Estate5.
Operating profit by division, EUR millions

Q1/04 Q4/03 Q3/03 Q2/03

Department Store Division0.726.47.37.9
Vehicle Division1.
Hobby Hall-0.70.9-2.6-1.0
Real Estate3.
Other operating income0.
Operating profit by division, EUR millions

Q1/03 Q4/02 Q3/02 Q2/02

Department Store Division-1.827.76.07.2
Vehicle Division1.
Hobby Hall-0.71.0-0.70.9
Real Estate4.
Other operating income12.

This Interim Report is unaudited.

Helsinki, April 27, 2004


Hannu Penttilä Managing Director

DISTRIBUTION Helsinki Exchanges Principal media

A press and analyst conference will be held today, april 27, 2004, at 14.00 at the World Trade Center, Aleksanterinkatu 17, Helsinki.