Stockmann on Wednesday reported that its operating profit fell by 2.9 million euros year-on-year to 14.6 million euros between April and June, following a drop of almost 40 million, to 281 million euros, in consolidated net sales.
The operating profit fell well short of the expectations of analysts interviewed by Reuters, highlights Helsingin Sanomat.
A poll by the news agency found that analysts were expecting the traditional retailer to report net sales of roughly 284 million euros and an operating profit of 21 million euros in the second quarter of the year.
The weaker-than-expected performance was mainly attributable to the eroding profitability of Lindex, a fashion chain that has kept the struggling retailer afloat in recent years. Lindex is currently one of the three business divisions of Stockmann, along with Stockmann Retail and Stockmann Real Estate.
Its net sales and operating profit slumped in the second quarter due to the intensive campaigning and market uncertainties in Sweden, according to Lauri Veijalainen, the chief executive of Stockmann.
Lindex, he pointed out in the half-year report, continued to see revenue growth outside the Nordics, but the improvements were not enough to match the record-high operating profit posted by the fashion chain between April and June of 2016.
“Action will be taken to improve sales and profitability,” promised Veijalainen.
He highlighted that the retail and real estate divisions improved their operating profit by a total of ten million euros between April and June, with the former having an especially strong second quarter.
“Stockmann Retail delivered a good second quarter. Comparable revenue has now stabilised and we achieved slight sales growth in fashion and cosmetics,” told Veijalainen. “A lot remains to be done, but our direction is definitely the correct one.”
Stockmann also said it will continue to introduce measures to improve its long-term competitiveness and profitability. The streamlining measures adopted last year are expected to have an impact on the full-year result for 2017.
The retail division is expected to continue improving its operating result and the real estate division its stable performance, according to Stockmann.
The traditional retailer announced earlier this summer that it will offload its grocery shops in Finland, Stockmann Herkku, to the S Group. The proposed divestment, which remains subject to the approval of antitrust authorities, is projected to improve the profitability of Stockmann as of 2018.
Aleksi Teivainen – HT
Photo: Mikko Stig – Lehtikuva