Stockmann Group’s Interim Management Statement, 1 January – 30 September 2021

Stockmann Group’s third-quarter result improved clearly in both divisions; Lindex generated its best-ever quarterly operating result

STOCKMANN plc, Interim report, 29.10.2021 at 8.00 EET

July–September 2021:
- Consolidated revenue was EUR 237.8 million (207.6), up 12.0% in comparable currency rates.
- Gross margin was 59.5% (57.4).
- Operating result was EUR 33.2 million (14.3).

- The adjusted operating result was EUR 33.3 million (16.5).
- Earnings per share were EUR 0.15 (0.01).
- Adjusted earnings per share were EUR 0.15 (0.04).

January–September 2021:
- Consolidated revenue was EUR 621.5 million (558.7), up 8.8% in comparable currency rates.
- Gross margin was 59.1% (55.3).
- Operating result was EUR 31.8 million (-14.0).

- The adjusted operating result was EUR 39.0 million (-9.3).
- Earnings per share were EUR 0.08 (-0.69).
- Adjusted earnings per share were EUR 0.13 (-0.62).

Guidance for 2021 (unchanged):
Stockmann expects a clear increase to the Group revenue and the adjusted operating result to be clearly positive assuming that no major COVID-19 restrictions are imposed.

CEO Jari Latvanen:
Stockmann Group’s third quarter was very strong. The operating result improved by EUR 18.9 million compared to the reference period. Lindex made its best quarterly result ever, EUR 31.6 million, and the Stockmann division improved its performance clearly, by EUR 4.7 million, reaching a positive result. Due to the increasing vaccination rate, the customer flows started to reach healthier levels in the third quarter.

Lindex generated an outstanding result due to increased sales in all markets and business areas, and a very high gross margin. Sales in the brick-and-mortar stores were boosted due to higher visitor levels, and the strong development in the online store continued.

For the first time since the fourth quarter in 2019, the Stockmann division delivered a positive result, slightly above zero. Sales in the brick-and-mortar stores increased clearly during the third quarter and changed the balance between the sales channels. Both channels showed healthy growth during the quarter. The Riga Delicatessen was re-opened in September after being closed and renovated for two months.

The execution of Stockmann’s restructuring programme has proceeded according to the plan.

KEY FIGURES

7–9/
2021
7–9/
2020
1–9/
2021
1–9/
2020
1–12/
2020
Revenue, EUR mill. 237.8 207.6 621.5 558.7 790.7
Gross margin, % 59.5 57.4 59.1 55.3 56.1
Operating result (EBIT), EUR mill. 33.2 14.3 31.8 -14.0 -252.4
Adjusted operating result (EBIT), EUR mill. 33.3 16.5 39.0 -9.3 4.9
Result for the period, EUR mill. 23.3 3.3 12.9 -44.9 -291.6
Earnings per share,
undiluted and diluted, EUR
0.15 0.01 0.08 -0.69 -3.88
Personnel, average 5 866 5 975 5 611 6 104 5 991
Cash flow from operating activities, EUR mill. 31.9 23.3 66.6 109.2 147.4
Capital expenditure, EUR mill. 4.5 4.2 9.1 14.6 19.4
Equity per share, EUR 1.54 5.88 2.90
Net gearing, % 271.5 184.5 336.1
Equity ratio, % 16.9 25.2 14.6

Where applicable, figures have been adjusted to correspond with the change in accounting policy.

CORPORATE RESTRUCTURING PROGRAMME

In a decision on 9 February 2021, the Helsinki District Court approved Stockmann plc’s restructuring programme, and the restructuring proceedings have ended. The restructuring programme is based on the continuation of Stockmann’s department store operations, the sale and leaseback of the department store properties located in Helsinki, Tallinn and Riga and the continuation of Lindex’s business operations as a fixed part of the Stockmann Group. The properties’ sale and leaseback projects are progressing in all three countries. The aforementioned properties must be sold by 31 December 2021 at the latest at the risk of the restructuring programme lapsing, unless the Supervisor postpones the deadline for the sale until 31 December 2022 for a justified reason. The supervisor has subsequently accepted a timeline with estimated sale latest during Q1 2022 in order to reach an optimal outcome for the company and the creditors.

On 18 May 2021, the Board of Directors resolved, pursuant to the authorisation granted by the General Meeting, on a share issue of at most 100 000 000 new shares of the company, carried out in deviation from the shareholders’ pre-emptive subscription rights. Furthermore, pursuant to the restructuring programme, the creditors of unsecured restructuring debt were entitled to convert their receivables under the payment programme of the restructuring programme to new senior secured bonds issued by the company.

A total of 79 335 175 conversion shares were subscribed for in the share issue, and the total number of Stockmann shares increased to a total of 154 436 944 shares. Trading with the conversion shares commenced on Nasdaq Helsinki Ltd on 7 July 2021.The subscription price was EUR 0.9106 per share and, as a result, approximately EUR 72.2 million of Stockmann's unsecured restructuring debt and hybrid loan debt were converted into Stockmann shares. The remainder of that part of the confirmed unsecured restructuring debt and hybrid loan debt which would have been eligible for share conversion in the share issue will be cut in accordance with the restructuring programme (Stock Exchange Release, 5 July 2021). Other operating income in Q3 2021 included a restructuring debt cut of EUR 2.7 million.

On 18 May 2021, Stockmann plc announced an offering of senior secured bonds to certain unsecured creditors of the issuer under the restructuring. Pursuant to the restructuring programme, the unsecured creditors were entitled to convert their receivables under the payment programme of the restructuring programme that have been confirmed to unsecured debt, by way of set-off, to senior secured bonds on a euro-for-euro basis. The aggregate principal amount of the bonds validly subscribed for by the unsecured creditors was EUR 66 149 032. Accordingly, Stockmann issued bonds to the aggregate principal amount of EUR 66 149 032. The issue date of the bonds was 5 July 2021. Trading of the bonds on the official list of Nasdaq Helsinki Ltd commenced on 7 July 2021 under the trading code ‘STCJ001026’.

Following the share and bond conversions, the remaining confirmed unsecured restructuring debt under the payment programme of the restructuring programme amounts to approximately EUR 21.8 million. Under the restructuring programme, Stockmann also has restructuring debt that is conditional, the maximum amount or disputed in respect of which the amount subject to the payment programme will be confirmed later and the creditors of such restructuring debt will be entitled to convert their receivables to shares and bonds after their respective receivables have been confirmed (Stock Exchange Release, 5 July 2021).

COVID-19

The lifted restrictions related to COVID-19 have had a positive effect on Stockmann Group’s operating environment and customer volumes in the third quarter.

For the Lindex division, sales during the third quarter in brick-and-mortar are back on the 2019 level despite restrictions in some markets at the beginning of the quarter. Growth in online sales continued to increase significantly compared to 2019.

In the Stockmann division, sales increased throughout the period, resulting in a notable cumulative improvement both online and in brick-and-mortar stores. A similar trend is visible in customer volumes, ending in a total volume on a par with the previous year.

Other operating income for the period included EUR 3.5 million public funding related to the COVID-19 situation received mainly by Lindex in various countries. For the third quarter, the corresponding amount was EUR 0.6 million.

GUIDANCE FOR 2021 (unchanged)

Stockmann expects a clear increase to the Group revenue and the adjusted operating result to be clearly positive assuming that no major COVID-19 restrictions are imposed. 

MARKET OUTLOOK FOR 2021

Uncertainty in the global economy is expected to persist throughout 2021, and the COVID-19 pandemic will continue to have a significant impact on the economy across the world, until the coronavirus situation is under better control. The retail market is expected to remain challenging due to changes in consumer behaviour and confidence, which are also affected by the coronavirus situation.

The Stockmann division will continue to execute the restructuring programme and Lindex to drive efficiencies and explore new growth opportunities.

Interim Management Statement
This company announcement is a summary of the Stockmann's Interim Management Statement for 1 January – 30 September 2021 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 stockmanngroup.com.

Webcast
The press and analyst briefing will be held on 29 October 2021 at 10:00 as a live webcast, that can be followed by this link or on the address stockmanngroup.com. The recording and presentation material are available on the company's website after the event.

Further information:
Jari Latvanen, CEO, tel. +358 9 121 5606
Pekka Vähähyyppä, CFO, puh. +358 9 121 3351
Henna Tuominen, Director, Communications, CSR and IR, tel. +358 50 5705080

www.stockmanngroup.com

STOCKMANN plc

Jari Latvanen
CEO

Distribution:
Nasdaq Helsinki
Principal media



Stockmann Interim Management Statement Q3 2021.pdf


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