HOBBY HALL FOCUSES ON DISTANCE RETAILING

STOCKMANN plc STOCK EXCHANGE BULLETIN October 9, 2003, 8.00 a.m.

HOBBY HALL FOCUSES ON DISTANCE RETAILING AND INCREASES THE EFFICIENCY OF ITS FUNCTIONS

The Hobby Hall Division, which is part of the Stockmann Group, will tighten its focus on distance retailing, in which it will increase the efficiency of logistics and product range management. The role of its stores will be modified to support distance retailing and three stores will be closed. The aim of the overhaul is to improve the profitability of the division by EUR 7.5-8.5 million at the annual level. Due to the closing of stores, personnel will be cut by about 80 people in Finland and by about 10 people in Estonia.

The Hobby Hall Division engages in distance retailing in Finland and in all of the Baltic countries. In addition, it has stores in Finland and Estonia. After its relative sales margin and sales fell substantially short of its targets, Hobby Hall's profitability has been unsatisfactory. Last year, its operating profit was EUR 0.5 million, while it posted an operating loss of EUR 1.7 million in the first six-month period of the present year.

In order to develop its operations, the Hobby Hall Division will focus more closely on distance retailing, in which it is the market leader in Finland and all of the Baltic countries. The role of its store network will be modified to support distance retailing and three stores will be closed. The store in Herttoniemi, Helsinki, was closed at the beginning of September. The operations of the stores in Espoo, Tampere and the centre of Tallinn will end during the starting winter season. The operations of the stores that will remain in business - on Hämeentie street in Helsinki, Tammisto in Vantaa and Rocca al Mare in Tallinn - support distance retailing. The share of their stock accounted for by product batches that will be discontinued from distance retailing will grow.

The efficiency of the logistics and product range management of distance retailing will be upgraded to measure up to the challenges of the realigned business operations. As part of the development of business operations, Hobby Hall will assess its opportunities for centralising its storage functions that are presently located in both Viinikkala and Tammisto in Vantaa in a single location - namely the Viinikkala warehouse - by the end of 2004.

The aim of the overhaul is to improve earnings by about EUR 7.5-8.5 million at the annual level. Due to the closing of stores, personnel will be cut by about 80 people in Finland - part of whom are part-time or temporary employees - and by about 10 people in Estonia.

The measures geared towards improving earnings will primarily be realised during the first months of next year. The closing of stores will, however, burden Hobby Hall's financial result for 2003, which will be below the earnings in the previous year and in the red. The Stockmann Group's earnings estimate for the full year remains unchanged. The target still is that the Group's profit before extraordinary items will be better than in 2002.

Questions will be answered by Henri Bucht, deputy managing director of Stockmann and managing director of Hobby Hall, tel. +358 50 389 0010.

STOCKMANN plc

Hannu Penttilä CEO

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