Finland based retail chain Stockmann plc which operates fashion brand Lindex, posted consolidated revenue of EUR 495.3 million, down 8.9 percent and also down 5.1 percent at comparable exchange rates in the second quarter of 2014 from EUR 543.6 million in the second quarter of 2014.
Operating profit for the April-June 2014 quarter stood at EUR 3.5 million also down from EUR 30.1 million from the comparable quarter of 2013.
Relative gross margin fell to 48.1 percent in the quarter under review to 49.1 percent from April to June quarter of 2013.
Stockmann posted a loss before tax of EUR 3.8 million from a profit before tax of EUR 21.6 million it reported in the second quarter of 2013.
Net loss stood at EUR 8.1 in the second quarter of 2014 against net income of EUR 19.5 in the same period of 2013.
Undiluted earnings per share turned negative at EUR 0.11 compared to EUR 0.27 earnings per share.
Stockmann estimates that the Group’s euro-denominated revenue in 2014 will decline from 2013. It also expects operating profit in 2014 to be significantly weaker than in 2013.
CEO of Stockmann Hannu Penttilä said, “The retail market is undergoing significant changes in Finland. Consumer confidence remains low and demand for non-food products has clearly declined. We at Stockmann have not succeeded in beating this negative market development.
“Online business is changing consumer behaviour, but online stores are not yet compensating for the dramatic decline in traditional retail. At the same time, the market environment in Russia continues to be challenging, as the Russian rouble remains weak and the country’s future economic direction is unclear. The market environment in the Baltic countries, Sweden and Norway has been stable.”
To arrest the downtrend, Stockmann said it will introduce a new reporting structure in order to better reflect the different business logics in retail and real estate. This will be done to increase focus and transparency and to optimise the use of floor space in order to improve the customer experience.
From 1 January 2015 the new reporting segments will be, Stockmann Retail, Real Estate and Fashion Chains.
Stockmann Retail will consist of the Stockmann department stores, the Academic Bookstore, Hobby Hall and the Stockmann Beauty cosmetic stores. Real Estate will consist of the Group’s real estate holdings in Helsinki, St Petersburg, Tallinn and Riga which are used by the Stockmann department stores and external tenants. Fashion Chains will consist of Lindex and Seppälä.
