Stockmann makes progress, Lindex has strong year, profits improve
Finnish retail giant Stockmann is upbeat for the future, despite expecting “the uncertainties in the global economy” to continue and “the retail market to remain challenging due to changes in consumer behaviour, increasing competition, and moderate consumer confidence”.
The owner of the Stockmann and Lindex chains will “continue to investigate strategic alternatives” for the latter’s ownership, while simultaneously driving growth at the brand.
The prediction came as it released its 2019 and Q4 results, saying its adjusted operating result improved in the final three months of last year.
Q4 consolidated revenue fell 5.1% at comparable currency rates (CCR) to €285.7 million, as expected after various strategic changes, but the gross margin rose to 56.6% from 55.6%. And it made operating profits of €22.4 million, up sharply from a loss of €2.8 million a year earlier. The adjusted operating result was €28 million, up from the year-earlier €23.5 million (or €19.1 million excluding the divested Nevsky Centre in St Petersburg).
For the full year, consolidated revenue fell 4.5% CCR to €960.4 million, the gross margin dipped to 56.3% from 56.9%, and operating profit was €13.3 million, up from a loss of €5 million. Adjusted operating profits rose to €29 million from €28.4 million (or €10.4 million excluding Nevsky Centre).
It clearly saw progress in Q4 and especially since some of the weaker results in earlier periods. And the company expects further progress on the profits front this year, saying it will “improve clearly” on that €13.3 million figure in 2020.
CEO Jari Latvanen highlighted the changes that took place last year and said “the first effects of our strategic actions and ongoing transformation are emerging in our financial results”. He also pointed to the rejuvenation programme that led to "the improved performance of both Lindex and Stockmann”.
Although due to seasonality, most of the year's earnings were achieved in the fourth quarter, Lindex “had a strong full-year result with increased profitability in all markets, sales channels and business areas”. In Q4, its adjusted operating profit improved due to “good gross margin development and cost control”.
Its aim for Lindex is to “further strengthen international growth and in particular digital transformation”.
And while the Stockmann division’s business remained loss-making for the full year, the last quarter was profitable. The company said it’s continuing to “work decisively towards our main target of returning our department store business to a sustainable level by 2021. There are several ongoing projects and reforms to improve the trend and we are proceeding according to plans”.
It said its two-year rejuvenation process for Stockmann “progresses well” with the target being to make it “a marketplace for good life that offers the best and most inspiring products in fashion, beauty and home”.
While both brands “continue to systematically develop digital services”, they’re also adding “technology solutions to strengthen their multichannel approach”. And as well as planning to launch a new webstore this summer, Stockmann is also upgrading its department stores in Helsinki and the Jumbo shopping centre.
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