STOCKMANN on Monday revealed it is exploring options for its loss-making department store business and considering changing its name to Lindex, a Swedish low-cost fashion chain it acquired in 2007.
The board of directors of the iconic department store chain decided yesterday to commence a strategic assessment to increase shareholder value by re-focusing the business on Lindex.
Sari Pohjonen, the board chairperson at Stockmann, assured that the name change would not impact the branding or daily business of the department stores.
Lindex in 2022 posted revenue of 661 million euros, accounting for more than two-thirds of the revenue of Stockmann. The fashion retailer was also the main profit contributor within the group with an operating profit of 90 million euros, continuing to keep its parent company afloat in spite of the losses of the department stores.
Stockmann on Monday stated that the name change would better reflect the growing importance of Lindex.
The strategic assessment is to be finalised by the end of next year.
Rauli Juva, an analyst at Inderes, stated to Helsingin Sanomat that the likelihood of Stockmann divesting its department store business has increased substantially. Pohjonen, though, declined to speculate on the fate of the department stores in an interview with the daily newspaper.
“The strategic assessment has only been launched and, at this point, it’s completely premature to even try to guess how likely a given option is,” she remarked.
She also declined to provide answer whether preliminary discussions about the possible divestment have already taken place, underscoring that changes in the ownership structure are only one of the options the company is considering in order to establish the best possible preconditions for developing its business.
One of the other options, she added, is splitting the department store into a separate business.
“If we’re talking at the general level, retail operations have naturally been affected by the pandemic and many other things. And Stockmann Group hasn’t been immune to these things in recent years,” she commented.
Stockmann in December 2022 launched a restructuring programme that, according to an interim report published last summer, is nearing its completion.
Juva on Monday told Helsingin Sanomat that the lack of an update on the programme suggests the completion is not exactly imminent. He and his colleagues do not believe, though, that the programme could become an obstacle to the possible sale of the department store business or other arrangements.
Aleksi Teivainen – HT