Stockmann Oyj Abp: Progress in Creating a New Stockmann – the Company Will Accelerate Its Efficiency Measures and Appoint a New Management Team

Regulatory News:

Stockmann (HEX:STCAS) (HEX:STCBV) confirmed its new strategic direction at the end of 2014 and since then has been implementing its strategy in challenging market conditions. The company has made considerable changes to its operations and discontinued unprofitable businesses. These measures will improve Stockmann’s profitability during 2016.

In spring 2015 Stockmann launched a large-scale efficiency programme. The programme will gradually have an impact on operating costs during 2016. It is anticipated that the annual savings target of EUR 50 million will be achieved by the end of 2016. The new distribution centre that has been taken into use will produce additional savings as of 2017.

To accelerate the turnaround of the loss-making Stockmann Retail division, Stockmann will enter the next stage of its strategy implementation. The target is for Stockmann Retail to achieve a positive operating result (EBIT) in 2018. Stockmann’s outlook for 2016 (stock exchange announcement 18 February 2016) remains unchanged: The Group’s operating result excluding non-recurring items is expected to be slightly positive in 2016.

”The market conditions have been more challenging than predicted for a long time now and consumer behaviour has changed considerably. Despite the changes that we have made, Stockmann’s sales performance has not lived up to our expectations and our cost structure is too heavy in relation to our current revenue level. We need to develop our operations in order to quicker meet the needs of the continuously changing customer needs and offer a competitive customer experience both in department stores and online,” says Lauri Veijalainen, Stockmann’s interim CEO.

Codetermination negotiations to start in Finland

To adjust the cost structure, Stockmann will initiate codetermination negotiations affecting approximately 3 000 employees in Finland. The aim of the negotiations will be to find solutions that will make the number of Stockmann’s employees correspond with the scope of current operations and with benchmarks carried out among international department store retailers. The number of department store sales assistants will not be reduced to ensure excellent customer service. The measures are expected to result in the reduction of around 380 employees in Finland and will include lay-offs, pension plans and the termination of temporary employment relationships. The potential reductions will be implemented from autumn 2016 onwards.

The goal is annual cost savings of approximately EUR 20 million, which will be achieved during 2017. Non-recurring costs related to possible personnel reductions, which are booked for 2016, will be defined after the negotiations have been ended.

New organisation and new Management Team

Stockmann’s target is to considerably flatten its organisational structure, eliminate overlaps and simplify processes. A new organisation is planned, which will be negotiated with the personnel as part of the codetermination negotiations and it would be introduced in full on 15 August 2016. The organisation would comprise the following functions:

Store Operations, which is responsible for sales in Stockmann’s department stores. Maiju Niskanen M.Sc. (Econ.), born 1977, has been appointed to lead the new function. Niskanen is currently Country Manager for Lindex Finland and the Baltic countries. She joined the Stockmann Group in 2001 and has held several positions in buying, store operations and business controlling at Lindex and in Stockmann department stores.

Delicatessen, which is a function responsible for food buying and Delicatessen’s store operations and services, and will be led by Susanna Ottila, M.Sc. (Econ.), born 1968. Ottila joined Stockmann in 2014 and has led Stockmann’s food chain since 2015. She has over 10 years of experience in marketing and business development management in food industry in e.g. Vaasan Oy and Unilever.

Real Estate, which will continue to be led by Björn Teir, Director, Real Estate.

Marketing and Digitalisation, which is a new function responsible for marketing, loyal customer, and digital services at Stockmann. The director for the function will be appointed at a later stage.

Supply Chain, which is a new function responsible for the department stores' non-food buying organisation and logistics, and will be led by Tove Westermarck. Westermarck has been Director, Development and a member of the Management Team since autumn 2014.

Communications and CSR, which will continue to be led by Nora Malin, Director, Corporate Communications.

ICT and Process Development, which will continue to be led by Petteri Naulapää, CIO.

HR, which will continue to be led by acting HR Director Katri Koro.

Finance and Legal, which will be led by acting CFO Eva Mansikka-Mikkola and Jukka Naulapää, Director of Legal Affairs, who also continues as the secretary of the Management Team and Board of Directors.

The Management Teams of the Stockmann Group and Stockmann Retail will be merged to speed up decision-making. Stockmann’s Management Team consists of the following persons as of 13 June 2016: Lauri Veijalainen (chairman), Nora Malin, Jukka Naulapää, Petteri Naulapää, Maiju Niskanen, Susanna Ottila, Björn Teir, and Tove Westermarck. All Management Team members report to interim CEO Lauri Veijalainen. Lindex will be developed independently as a separate group. Lindex’s CEO Ingvar Larsson will continue to be a member of the Stockmann Management Team.

Jouko Pitkänen, Director of Stockmann Retail and a member of the Stockmann Management Team, has resigned and will leave his position according to mutual agreement as of 13 June 2016.

Stockmann Retail, Real Estate and Lindex remain as the Group’s segments in financial reporting.

STOCKMANN plc

Lauri Veijalainen Interim CEO

Distribution: Nasdaq Helsinki Principal media

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