Stockmann sees steady growth in operating profit

01 Nov '12

5 min read

The Crazy Days campaign after the quarter continued to boost the Department Store Division’s revenue. We achieved a revenue growth of 8 per cent in total in the campaign, with 21 per cent growth in Russia and 3 per cent in the Baltic countries. In Finland the campaign was also launched online and this contributed to the growth in Finland reaching 3 per cent. The Group’s sales development in September and the Crazy Days campaign provide us with confidence for the important final months of the year. We are well positioned to achieve the targeted revenue and operating profit growth for the full year.

Stockmann is currently investigating two important projects in order to strengthen its financial position and implement its long-term strategy. Firstly, the company will investigate opportunities to issue a corporate bond on the credit market. With bond financing the company would diversify its sources of finance and maturity profile by replacing a part of its existing bank loans and credit facilities.

Secondly, Stockmann has successfully completed the construction of the Nevsky Centre shopping centre in St Petersburg, the operation of which is in full swing. The positive development of the Russian real estate market has encouraged Stockmann to evaluate the commercial value of the shopping centre and potentially strengthen the company’s financial position by finding an outside investor for the real estate property. If acceptable terms can be achieved, Stockmann could consider completing this transaction during 2013.

The unstable state of the world economy and the unresolved European debt crisis create a challenging basis for assessing the future outlook, especially the long-term retail market development. There are indications of weakening consumer behaviour in particular in Finland, where consumers’ confidence in their own economy declined in the summer.

The Russian market is likely to continue to perform better than the Nordic countries, mainly provided that the price of oil does not drop significantly from its current level. The growth of consumer markets in the Baltic countries is expected to continue. However, high uncertainty and weakening consumer confidence may continue to affect consumers’ purchasing behaviour in all markets.

The market for affordable fashion developed poorly in 2011 and in the first half of 2012, particularly in Sweden. The market started to grow in September but the outlook for the rest of the year is still uncertain.

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