1 January 30 September 2012 Hannu Penttil CEO Q3 2012 in brief - - PowerPoint PPT Presentation

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1 January 30 September 2012 Hannu Penttil CEO Q3 2012 in brief - - PowerPoint PPT Presentation

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Interim Report 1 January 30 September 2012 Hannu Penttil CEO Q3 2012 in brief Steady revenue growth despite the uncertain market Strongest growth for Lindex, particularly thanks to the campaign with Missoni Good performance

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SLIDE 1

Interim Report 1 January–30 September 2012

Hannu Penttilä CEO

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SLIDE 2

Q3 2012 in brief

  • Steady revenue growth despite the uncertain market

‒ Strongest growth for Lindex, particularly thanks to the campaign with Missoni ‒ Good performance continued in the Russian and Baltic department stores

  • Operating profit up due to improvements in Russia,

Sweden and Norway

  • Operating profit below last year’s figure in Finland

‒ Signs of weakening consumer purchasing behaviour, but the Crazy Days campaign gave a good start for the last quarter of the year

  • Outlook for the rest of 2012 unchanged
  • Important projects launched to strengthen the

company’s financial position

31.10.2012 2

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SLIDE 3

Share of revenue 60% in 1-9/2012 Share of revenue 40% in 1-9/2012

Department Store Division

16 department stores and 31 other stores in 4 countries; 3 distance retail stores 684 stores in 16 countries (Lindex 461, Seppälä 223); 2 online stores

Two strong business divisions

Stores as of 30 June 2012

Fashion Chain Division

EUR 879 million EUR 593 million

31.10.2012 3

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SLIDE 4

Revenue in Q3 2012

  • Revenue up 5.2% to EUR 485.1

million (EUR 461.3 million)

‒ Revenue in Finland up 1.2% ‒ International operations up 8.9% ‒ Revenue abroad 51.2% (49.5%)

  • f the total in January-September
  • Lindex’s revenue up in all countries

except in Norway

  • Department stores in Russia and in

the Baltic countries developed well, but slower growth in Finland

  • Seppälä’s revenue in Finland and

Russia down on 2011

‒ Brand renewal project started during the quarter

31.10.2012 4

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SLIDE 5

Finland 47% Sweden and Norway 29% Russia and Ukraine 16% Baltic countries and Central Europe 8%

Revenue by market in Q3 2012

31.10.2012 5

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SLIDE 6

Quarterly revenue

100 200 300 400 500 600 700 1-3 4-6 7-9 10-12

2010 2011 2012 EUR mill.

+10% +5%

31.10.2012

+5%

6

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SLIDE 7

Operating profit in Q3 2012

  • Relative gross margin 50.6% (49.1%)

‒ Improved in Lindex and Department Store Division, but decreased in Seppälä

  • Operating costs up 8.7%
  • Comparable gross margin and comparable
  • perating costs somewhat lower than the reported
  • nes
  • Depreciation on the same level as in Q3 2011
  • Operating profit EUR 17.1 million (EUR 15.2

million)

‒ Clear improvement in the Russian department stores and Lindex in Sweden and Norway ‒ Department Store Division and Seppälä down on 2011 in Finland

31.10.2012 7

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SLIDE 8

Quarterly operating profit

  • 30
  • 20
  • 10

10 20 30 40 50 60 1-3 4-6 7-9 10-12

2010 2011 2012 EUR mill.

31.10.2012 8

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SLIDE 9

Key figures

7-9/2012 7-9/2011 1-9/2012 1-9/2011 Revenue EUR mill. 485.1 461.3 1 472.6 1 379.2 Operating profit EUR mill. 17.1 15.2 30.5 10.8 Net financial costs EUR mill. 7.5 8.8 23.8 26.3 Profit before taxes EUR mill. 9.6 6.4 6.8

  • 15.5

Earnings per share EUR mill. 0.11 0.08 0.08

  • 20.0

Cash flow from

  • perating activities

EUR mill.

  • 17.5
  • 113.7

Equity ratio % 39.1 38.6 Gearing % 111.0 119.2 ROCE % 5.1 3.6

31.10.2012 9

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SLIDE 10

RUSSIA FINLAND SWEDEN NORWAY ESTONIA LATVIA LITHUANIA CZECH REPUBLIC SLOVAKIA BOSNIA AND HERZEGOVINA SAUDI ARABIA UNITED ARAB EMIRATES CHINA INDIA BANGLADESH PAKISTAN POLAND TURKEY

Department Store Division, Lindex and Seppälä Lindex and Seppälä Group’s purchasing offices

ICELAND

Stockmann today:

  • ver 700 stores in 16 countries

Status as of 30 September 2012

10 CROATIA SERBIA FINLAND

  • 7 department stores
  • 7 Academic Bookstores
  • Hobby Hall mail order sales

and 1 store

  • 12 Stockmann Beauty stores
  • 4 Zara stores
  • 1 outlet store
  • 55 Lindex stores
  • 137 Seppälä stores

SWEDEN

  • 208 Lindex stores

NORWAY

  • 97 Lindex stores

ESTONIA

  • 1 department store
  • 8 Lindex stores
  • 21 Seppälä stores
  • 1 outlet store

UKRAINE

  • 2 Seppälä stores

(closed down in October 2012) BOSNIA AND HERZEGOVINA

  • 3 Lindex franchising stores

SERBIA

  • 1 Lindex franchising store

CROATIA

  • 1 Lindex franchising store

ICELAND

  • 1 Lindex franchising store

SAUDI ARABIA

  • 19 Lindex franchising stores

UNITED ARAB EMIRATES

  • 5 Lindex franchising stores

ONLINE STORES

  • stockmann.com in Finland
  • akateeminen.com in Finland
  • hobbyhall.fi in Finland
  • lindex.com in the EU area

and Norway

  • seppala.fi in Finland

LATVIA

  • 1 department store
  • 7 Lindex stores
  • 10 Seppälä stores

LITHUANIA

  • 10 Lindex stores
  • 9 Seppälä stores

RUSSIA

  • 7 department stores
  • 1 shopping centre
  • 1 concept store
  • 21 Lindex stores
  • 44 Seppälä stores
  • 10 Bestseller stores
  • 1 outlet store

CZECH REPUBLIC

  • 16 Lindex stores

SLOVAKIA

  • 4 Lindex stores

POLAND

  • 5 Lindex stores

UKRAINE 31.10.2012

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SLIDE 11

Events after the reporting period

  • Crazy Days campaign gives a direction for the last quarter’s sales

development in the department stores

  • Two important projects are being investigated to strengthen the company’s

financial position and implement the long-term strategy

31.10.2012 11

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SLIDE 12

1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 203% 25% 15% 18% 9% 9% 4% 14% 23% 8% 26% 10% 22% 0% 13% 8% 7% 28% 28% 18% 11% 3%

  • 6%

22% 19% 10% 1986 Spring campaign 1997 Autumn Tallinn 2005 Spring Riga 2006 Spring Russia 2012 Autumn Stockmann.com

Crazy Days revenue growth 1986–2012

  • Growth 13 per cent in spring 2012
  • Growth 8 per cent in autumn 2012

‒ Russia up 21 per cent ‒ Baltic countries and Finland up 3 per cent

31.10.2012 12

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SLIDE 13

Investigating opportunities for a corporate bond

  • Issuing a bond on the credit market would diversify sources of finance and

the maturity profile of the Group’s interest-bearing liabilities

31.10.2012 13

In addition, the Group has EUR 288 million in undrawn, long-term committed credit facilities and EUR 243 million in uncommitted credit facilities.

Maturity profile of the interest-bearing liabilities

50 100 150 200 250 300 350 400 2012 2013 2014 2015 2016+

Loans from financial institutions Pension loans Commercial papers Finance leases

EUR mill.

Status as of 30 September 2012

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SLIDE 14

Evaluating the commercial value of Nevsky Centre in St Petersburg

  • Shopping centre with a total space of approx. 100 000 sqm
  • Property fully owned by Stockmann; capital expenditure EUR 185 million
  • Russia’s largest Stockmann department store (19 000 sqm), a car park and
  • ver 70 stores, service providers and other companies as Stockmann’s tenants

14 31.10.2012

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SLIDE 15

Outlook for the rest of 2012

  • Challenging to assess the outlook, especially long-term retail market, due to

unstable world economy and the unresolved European debt crisis

‒ Indications of weakening consumer behaviour in particular in Finland where consumers’ confidence in their own economy declined in the summer ‒ Market in Russia likely to continue to perform better than in the Nordic countries; growth in the Baltic countries expected to continue ‒ Affordable fashion market in Sweden grew in September but the outlook for the rest

  • f the year is still uncertain

‒ High uncertainty and low consumer confidence may affect consumers’ willingness to purchase in all markets

  • Discontinuation of Bestseller franchising business by the end of 2012 to

improve operating profit from 2013 onwards

‒ Targeting a positive full-year operating profit, excluding Bestseller, in Russia in 2012

  • Capital expenditure clearly below depreciation, approx. EUR 50 million
  • Stockmann Group’s revenue and operating profit expected to be above the

figures for 2011, provided that market sentiment does not significantly worsen

31.10.2012 15

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SLIDE 16

Department Store Division

Maisa Romanainen Executive Vice President Director of Department Store Division

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SLIDE 17

Key activities and highlights in Q3

  • Continuously strong performance of

the Russian and Baltic department stores, whereas the Finnish growth slowed down with uncertainty in the market

‒ Important autumn season opened with a store-wide “Shopping Guide“ campaign in all markets ‒ New own brand for women “Noom” was successfully launched in all markets ‒ Academic Bookstore’s renewed

  • nline store launched with strong

growth towards the end of the period ‒ Nevsky Centre KPI’s in St Petersburg developing positively, including the car park performance

31.10.2012 17

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SLIDE 18

Revenue in Q3 2012

  • Revenue grew by 2.5%, to EUR

272.7 EUR million (EUR 266.0 mill.)

  • Revenue up by 1.2% in Finland

‒ Market for electronics and books remains challenging ‒ Strong growth for Stockmann.com

  • Revenue of international operations

up by 5.7%

‒ 32.4% (30.1%) of the division’s total revenue ‒ Best volume growth in the newest Russian stores ‒ Revenue of the Bestseller stores, to be closed by the end of 2012, down by 55%

31.10.2012 18

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SLIDE 19

50 100 150 200 250 300 350 400 450 1-3 4-6 7-9 10-12

2010 2011 2012 EUR mill.

+9%

Quarterly revenue, Department Store Division

19

+7%

31.10.2012

+3%

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SLIDE 20

Operating profit in Q3 2012

  • Operating profit EUR 2.8 million

(EUR 2.9 mill.)

‒ Profitability of Russian and Baltic department stores developed well ‒ Operating profit did not reach the 2011 level in Finland with revenue growing slower than costs. ‒ Costs and gross margin are not fully comparable with 2011 ‒ Gross margin 42.4% (41.2%)

  • Stock level is healthy in all markets
  • Jan-Sept operating profit increased

by EUR 10.8 million to EUR 6.5 mill. (EUR -4.4 mill.)

‒ Including the Bestseller losses of EUR -4.9 million (EUR -3.6 mill.)

31.10.2012 20

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SLIDE 21

Quarterly operating profit, Department Store Division

  • 15
  • 10
  • 5

5 10 15 20 25 30 35 40 1-3 4-6 7-9 10-12

2010 2011 2012 EUR mill.

21 31.10.2012

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SLIDE 22

Ongoing projects

  • ERP renewal project proceeding

according to the plans with implementations in 2013 and 2014

  • Tampere, Itäkeskus and Tapiola renewal

and enlargement projects proceeding as earlier announced with major construction works somewhat effecting revenue

  • Eight Bestseller stores in Russia closed in

January-September, three of them in the third quarter

  • Division’s capital expenditure in January-

September was EUR 19.1 million (EUR 29.0 mill.)

  • In Nevsky Centre tenant mix changes

have started as planned – Starbucks to

  • pen in Q4

31.10.2012 22

Kuva tulossa Terolta?

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SLIDE 23

Crazy Days 10-14 October 2012

31.10.2012 23

Revenue Growth% Fall 2012/ Fall 2011 Fall 2012/ Fall 2010 Finland 3% 12% Baltics 3% 16% Russia 21% 93% Total 8% 29%

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SLIDE 24

Outlook for the rest of 2012

  • Very important Q4 had a good start with the Crazy Days revenue growth
  • Strong marketing efforts in all markets, channels and media to ensure

volume growth in Christmas season

  • Special attention to increasing amount of Russian tourists during year-end
  • Growth potential of the Russian market and uncertainty of the Finnish

consumer behaviour in focus when planning the coming year – leading to careful optimization and allocation of buying volumes

31.10.2012 24

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SLIDE 25

Fashion Chain Division

Pekka Vähähyyppä CFO, Executive Vice President

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SLIDE 26

Focus areas for the Fashion Chain Division Seppälä Brand Synergies

Challenger Project

IT Security HR Communication Logistics Finance IT Planning & Purchasing HR Store management Logistics Finance CSR Assortment Marketing Store Concept

26 31.10.2012

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SLIDE 27

Quarterly revenue, Fashion Chain Division

50 100 150 200 250 1-3 4-6 7-9 10-12

2010 2011 2012 EUR mill.

+12%

27

+4%

31.10.2012

+9%

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SLIDE 28

Quarterly operating profit, Fashion Chain Division

  • 15
  • 10
  • 5

5 10 15 20 25 1-3 4-6 7-9 10-12

2010 2011 2012 EUR mill.

28 31.10.2012

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SLIDE 29

29 31.10.2012

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SLIDE 30

Key activities and highlights in Q3

  • Fantastic quarter that ended up

with Lindex Missoni campaign with strong products and visual impact in stores and web shop

  • Great PR coverage worldwide –

initiated by fashion show in Stockholm

  • 10% of the total sales of Missoni

collection will be donated to the fight against breast cancer

  • Higher sales, higher gross profit

together with cost efficiency gave a higher operating profit in Q3 2012 compared to previous year

31.10.2012 30

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SLIDE 31

Revenue in Q3/2012

  • Sales improved during the third quarter
  • Euro-denominated revenue increased by

11.4% to EUR 175.8 million

‒ In local currencies, total revenue up 4.2% ‒ In local currencies, comparable revenue up 2.4% ‒ January-September revenue up 9.0% to EUR 486.8 million

  • Sales increased in women’s wear and

children’s wear

  • Strong sales increase in all markets

except in Norway

  • Increased market shares in all markets

except Norway

31.10.2012 31

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SLIDE 32

Quarterly revenue, Lindex

20 40 60 80 100 120 140 160 180 1-3 4-6 7-9 10-12

2010 2011 2012 EUR mill.

+12%

In local currencies, revenue increased by 4.2% in Q3 2012

32

+4%

31.10.2012

+11%

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SLIDE 33

Operating profit in Q3/2012

  • Q3 operating profit was EUR 15.6

million (EUR 11.4 million)

‒ January-September operating profit EUR 33.5 million (EUR 20.8 million)

  • Costs were affected by the

increased number of new stores and the strong Swedish krona

  • Gross margin was higher than last

year, at 61.9% (60.4%), mainly due to fewer price reductions

  • The stock level has decreased in

total and is well-balanced

31.10.2012 33

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SLIDE 34

Quarterly operating profit, Lindex

  • 10
  • 5

5 10 15 20 25 1-3 4-6 7-9 10-12

2010 2011 2012 EUR mill.

34 31.10.2012

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SLIDE 35

International expansion

  • 5 stores opened and 1 closed in Q3
  • Lindex franchising opened in two new

markets, Serbia and Croatia

  • In total 461 stores (440 stores)
  • Target for full year 2012 is

approximately 470 stores

31.10.2012 35

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SLIDE 36

Fight against breast cancer

  • Lindex is fighting against breast cancer

through the Pink Ribbon Campaign in October

  • New for this year is the collaboration with

Missoni that has increased the impact of the donation – 10% of the sales on the Lindex Missoni collection is to be donated, in addition to the sales coming from the pink bracelet and the pink ribbon

  • The donation will amount to EUR 1.8 million

for all markets (2011: EUR 0.9 million)

  • Together with our customers we look forward

to contributing to the important fight against breast cancer

31.10.2012 36

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SLIDE 37

Outlook for the rest of 2012

  • Strong collections and good prices for

the Christmas Campaign covering all business areas

  • Uncertain market environment in the

Nordic countries

31.10.2012 37

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SLIDE 38

Nina Laine-Haaja CEO

38 31.10.2012

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SLIDE 39

Key activities and highlights in Q3

  • Revenue and operating profit below

the Q3 targets

‒ Baltic countries continued their good performance ‒ Conversion rate improved, but less visitors in the stores

  • Brand renewal project started in
  • rder to improve operations in the

coming years

  • Fashion Chain Division will bring

increased efficiency and synergies

  • Successful designer collection

launch in collaboration with Tiia Vanhatapio in August

31.10.2012 39

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SLIDE 40

Revenue in Q3 2012

  • Q3 revenue EUR 36.5 million

‒ Down 3% from the previous year

  • Baltic countries continue on a growth

path

  • Revenue in Finland and particularly in

Russia was lower than in 2011

  • In Finland Seppälä’s growth 4% in

January-August, while the market growth has been 3%

‒ September market figure not yet available, but growth is expected to slow down

  • Visitor amounts increased in the Baltic

countries but decreased in other markets

31.10.2012 40

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SLIDE 41

Quarterly revenue, Seppälä

10 20 30 40 1-3 4-6 7-9 10-12

2010 2011 2012 EUR mill.

+12%

41

±0%

31.10.2012

  • 3%
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SLIDE 42

Operating profit in Q3 2012

  • Operating profit EUR 0.5 million

(EUR 1.5 million)

  • Gross margin 56.6% (57.7%)

‒ Down in women’s wear, but up in men’s and children’s wear ‒ Price-driven campaigns to boost sales

  • Operating profit in January-

September EUR -2.8 million (EUR -0.8 million), including closing costs of operations in Ukraine

‒ Positive profit development in the Baltic countries; Finland and Russia below 2011

  • Stock level lower than in 2011

31.10.2012 42

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SLIDE 43

Quarterly operating profit, Seppälä

  • 5
  • 4
  • 3
  • 2
  • 1

1 2 3 4 5 1-3 4-6 7-9 10-12

2010 2011 2012 EUR mill.

43

Non-recurring expenses

31.10.2012

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SLIDE 44

International expansion

  • Store network:

‒ 1 store opening and 3 store closures in Q3 ‒ 223 stores in total at the end of September 2012 ‒ Closing of the stores in Ukraine in October 2012

  • Total number of stores at the

end of 2012 will be around 10 stores less than in 2011

31.10.2012 44

New store: 180 Porvoo Taidetehdas, Finland

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SLIDE 45

Outlook for 2012

  • Tiia Vanhatapio campaign in November + VIP night

‒ To increase brand image in Finland and attract new women interested in fashion to shop at Seppälä ‒ To boost online sales and attract more customers to visit www.seppala.fi

  • Magical Christmas campaign with “must buy” products and luxury feeling

‒ Visible marketing in December: TV, radio, outdoor, fashion magazines

31.10.2012 45

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SLIDE 46

Outlook for 2012

SEPPÄLÄ PARTY COLLECTION 2012

  • Interesting and commercial party collection

46

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SLIDE 47

31.10.2012 47