Stockmann swings to loss, but customers are returning to stores

Under-pressure Finnish retail giant Stockmann made a Q2 operating loss as the coronavirus crisis kept shoppers out of its department stores for much of the April to June period.

Stockmann, which filed for corporate restructuring in April, on Friday reported an operating loss of €3.1 million for the period. Its profit was €10.2 million a year earlier.

Revenue dropped from €242.3 million in the quarter a year ago to €182.7 million and the gross margin fell to 54.1% from 58.6%.

CEO Jari Latvanen said the pandemic had a “profound impact on our business performance” but it had been helped by it transformation and efficiency measures.

“Swift adjustment measures in both Lindex and Stockmann, combined with last year's cost savings programme, reduced the group's fixed costs by about €35 million compared with the previous year," he said.

He also said the corporate restructuring of the parent firm will allow it to renegotiate store lease deals.

The firm is working on a draft restructuring programme that will be unveiled in December and remains upbeat for now after adjusting its strategy to deal with the pandemic and lockdowns.

“We held Stockmann’s main campaign of the spring exclusively online and developed new services suited to the coronavirus restrictions,” the CEO said. “We also cut our costs significantly through furloughs and other cost-saving measures”.

But restrictions still “limited the operations of Stockmann’s stores in the Baltic countries, and the pandemic also had a large impact on the operations of the Lindex store chain in all market areas,” he added.

Despite being challenged on the revenue front due to store closures, the company still performed better than expected from the start of the lockdown period in March, “especially in home and beauty categories”. The amount of capital tied up in stock was also lower than a year ago in both divisions for Q2, and the company’s cash reserves were significantly strengthened.

And Latvanen added that the lifting of coronavirus restrictions had “increased customer flows at the Stockmann department stores and Lindex stores since late May”.

The strong growth in online sales at both Stockmann and Lindex also continued in Q2 and during the first half of the year overall. The Stockmann division launched around 50 new brands and delivered more online store orders than throughout the whole of last year. Meanwhile the growth of Lindex’s online store was 102% in the quarter.

Stockmann swings to loss, but customers are returning to stores

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