Seppälä is teetering on the brink of bankruptcy, reports Helsingin Sanomat.
The District Court of Helsinki on Monday confirmed to the newspaper that a bankruptcy petition has been filed against the loss-making fashion chain, which comprises over 70 shops and employs some 270 people in Finland and Estonia. The bankruptcy petition was filed by the Finnish Tax Administration.
Seppälä in March announced it has filed for debt re-structuring in order to secure
the future of its widely recognised brand and decided to shut down 14 of its most loss-making shops following the expiry of their tenancy agreements.
Taloussanomat was the first news outlet to report about the threat of bankruptcy hanging over Seppälä.
Lassi Nyyssönen, the lawyer appointed to oversee the debt re-structuring, said yesterday he requested that the re-structuring process be suspended on Friday. He told Helsingin Sanomat that the decision to suspend the process was made because the business has not developed as expected despite the drastic belt-tightening measures introduced by the management of Seppälä.
Seppälä was acquired from Stockmann in 2015 by Eveliina and Timo Melentjeff. Eveliina Melentjeff, the managing director of Seppälä, said in an interview with Helsingin Sanomat in May, 2015, she felt she had no choice but to try to rescue the fashion chain that had been a fixture of the street scene in Finland since 1930.
“We’re getting into this with passion,” she commented.
Seppälä had sunk deep into the red as clothing sales contracted for five consecutive years before a long-awaited turnabout last year. It was too little too late, however, as the ailing retailer reported operating losses of 11.7 million euros on net sales of 33.2 million euros in Finland and losses of 1.2 million euros on net sales of 5.7 million euros in Estonia in 2016.
Melentjeff conceded last spring that the bloated cost structure was the biggest problem for Seppälä.
“We have to reduce the number of loss-making shops either by adjusting tenancy agreements or by using other measures,” she stated to Helsingin Sanomat on 1 March, 2017.
The cold and rainy summer may have been the final blow for Seppälä.
Helsingin Sanomat writes that all of the 57 shops in Finland and 14 shops in Estonia operated by Seppälä would be shuttered in the event of the bankruptcy. The 270 people employed in the shops are consequently at risk of losing their jobs.
Aleksi Teivainen – HT
Photo: Irene Stachon – Lehtikuva