Following hike in losses in third-quarter of 2014, Finnish fashion retailer – Stockmann said, it will downsize operations of Seppälä brand significantly in Finland and Estonia and close down operations in Latvia and Lithuania.
Stockmann had earlier announced that it will shut down Seppälä’s stores in Russia during 2014 and 2015. Stockmann currently manages 130 Seppälä’s stores in Finland, 36 in the Baltic countries and 16 in Russia.
During the July-September 2014 quarter, operating loss rose further to EUR 14.8 million from EUR 10.7 million in the third quarter of 2013.
Consolidated revenue too slipped 10.9% to EUR 405.0 million in the third quarter of 2014 from EUR 454.4 million in the prior year quarter. Sales were 8.1% year-on-year at comparable exchange rates.
Efforts to improve Seppälä’s profitability have not been successful. In 2013 Seppälä’s operating loss was EUR 14.4 million and for 2014, excluding non-recurring items for 2014 are expected to be over EUR 25 million.
Stockmann is carrying out a process of reviewing and revising the Group’s strategy and the target is to improve Stockmann’s long-term competitiveness and profitability.
Stockmann said a new operating structure under three divisions – Stockmann Retail, Real Estate and Fashion Chains, will be introduced as of January 1, 2015.
In Stockmann Retail, the focus will increasingly be on the Stockmann department stores and stockmann.com online store.
The Real Estate division’s goal is to maximize the value of the Group’s real estate holdings.
The Fashion Chains include the Lindex and Seppälä businesses. Stockmann believes that Lindex has significant development potential to become a truly international fashion brand.
To support this strategy, an operational Board of Directors for AB Lindex, including new external members, was elected in October.
Chairman of the Board, Kaj-Gustaf Bergh said, “We have faced challenges in our operations, and therefore our sales have decreased more than the market.
“In September, revenues decreased in all divisions and this made a significant contribution to the weak earnings of the quarter. As a result, we also changed our profit guidance for the full year.”
Stockmann now estimates that the Group’s euro-denominated revenue in 2014 will decline from 2013 and its operating result, excluding non-recurring items is expected to be negative in 2014. (AR)
