Stockmann plc has decided to file for corporate restructuring
After the first week of March, the coronavirus (COVID-19) epidemic in Europe has caused significant changes in the operating environment of Stockmann Group, with customer volumes decreasing suddenly. Despite continued strong growth in recent weeks in the webstores of Stockmann and Lindex, the online sales growth cannot compensate for the drastic decline in customer volumes in the current exceptional situation.
As the company’s business remains viable and can be restored to a sound basis, the Board of Directors of Stockmann has decided, taking into consideration the company’s financial structure, to file for restructuring proceedings for Stockmann plc. The coronavirus and the restrictions it has caused have, and will continue to have, a significant impact on the company’s customer volumes and cash flow.
Group subsidiaries, including the Stockmann department stores in the Baltics and Lindex, are not in scope of the restructuring proceedings.
Business renewal on the right track until the coronavirus epidemic
In 2019, Stockmann Group renewed its strategy and launched a performance improvement program at Stockmann department stores and Lindex, targeting cost savings and other performance improvements. The strategic choices made, the cost-saving program and the improved performance of Lindex and Stockmann were visible in the positive adjusted operating result of year 2019. Year on year, the company’s business performance improved significantly in January–February 2020. The company’s total debt decreased significantly during 2019, for example, with the sale of the Nevsky Centre property. The company’s interest-bearing liabilities, excluding IFRS 16 lease liabilities, totaled EUR 412.3 million at the end of 2019.
“Stockmann and Lindex have been working very hard to develop and renew the company’s business, with the objective of getting both business operations on a growth track by 2021. The strategic choices made in spring 2019 have proven to be correct, and the Group’s business operations have developed as planned in 2019 and in January–February 2020. However, the unprecedented situation caused by the coronavirus has led to an extreme decline in customer volumes, depleting the company’s cash in hand. In this very difficult situation, the Board has decided to file for the corporate restructuring of Stockmann plc. The Board is convinced that with the initiatives already launched, Stockmann Group has the preconditions for profitable business,” says Lauri Ratia, Chairman of the Board of Directors of Stockmann plc.
“We have been working tirelessly and passionately with all our Stockmann and Lindex employees to improve our business performance and to serve our customers in the best possible way. Unfortunately, the coronavirus epidemic has forced us to look for new means of driving Stockmann Group into the future. Our primary goal at the moment is to secure the preconditions of our business and our jobs,” says Jari Latvanen, CEO of Stockmann plc.
“We are confident that the strategy chosen for Stockmann Group is the right one. We will continue the rapid development of the Lindex brand into a major European fashion house. We will also continue to develop the Stockmann department stores based on our three key principles: unique, high-quality products; best customer service; and new products from the world to Finland and the Baltics. At the same time, we want to be a responsible corporate citizen across our value chain and to restore healthy business operations in the Group,” Latvanen concludes.
On 18 March 2020, Stockmann announced that the coronavirus outbreak and the numerous restrictions and special regulations imposed as a result of the outbreak will decrease the volume of its business operations and its profitability considerably. On 23 March 2020, the company launched cost-saving measures and initiated codetermination negotiations concerning department store operations in Finland to adjust its personnel resources with temporary layoffs. In addition, Lindex has initiated measures to cut costs and to adjust its personnel resources in different operating countries due to the coronavirus situation.
Filing for corporate restructuring
The application for restructuring proceedings for Stockmann plc has been filed at the Helsinki District Court on 6 April 2020.
The company has discussed its intention to file for corporate restructuring with its bank syndicate and certain other major creditors. The creditors in question who represent over one fifth of the known creditors of the company, have preliminarily indicated a positive stance to the filing. The company’s Board of Directors will convene an extraordinary general meeting, at a date to be announced later, to decide on the possible extension of the restructuring proceedings. The company will hold its annual general meeting at a later date.
Stockmann will publish its Interim report for January–March 2020 on 30 April 2020. Stockmann will provide a new guidance when the visibility in the company’s markets is clearer.