Stockmann received a loss of €78.5 mln from the sale of stores in Russia

Finnish retailer Stockmann has recorded a one-time loss of €78.5 mln, obtained in connection with the sale of the eponymous Russian Department stores, revealed the company data in the financial report for 2015 on Thursday. In reporting the loss attributable to “discontinued operations” in Russia. Take into account the company’s net loss in October—December 2015 grew to €90.4 million to €38,1 million for the same period in 2014. For the full twelve months of 2015 Stockmann’s sales amounted to €1.43 billion, a net loss of — €175 million.

The sale of all of its Department stores in Russia, Stockmann announced at the end of November 2015, the results of this sale and reflected in financial reports. In the beginning of 2016 the seven stores under the brand Stockmann — five in Moscow and one in St. Petersburg and Yekaterinburg — €5 million were transferred to the company Reviva Holdings, which through its subsidiary company “Debrass” manages the franchise network of British Department stores Debenhams in Russia. Two Debenhams Department store working in Moscow — in shopping centers “Fleet” and “Mega Belaya Dacha”. Within two years after the closing of the transaction, the buyer retains the right to use the Stockmann brand, but the buyer plans to convert the stores under the banner of Debenhams, mentioned earlier in the press release “Debrosse”.

If the Finnish Stockmann will continue to manage your own shopping center “Nevsky center” in St. Petersburg with total area of 100 thousand sq. m. the asset will be transferred to the division of the company for management of investment property, indicated in the report. Long term anchor tenant of the shopping center since February of this year was Reviva.

Russian Department stores Stockmann sold as part of its strategy to improve the profitability of the business, the transaction was closed in early 2016. As previously explained CEO Per Thelin, Stockmann, business in Russia was “unprofitable over the past few years, and a significant devaluation of the rouble aggravated damages”. Since 2014 the company in its operating report mentioned that the geopolitical crisis in Ukraine and international sanctions against Russia has shaken its position in the region. Especially the top management noted that a significant portion of the goods that the retailer sold in Russia is imported origin, so the Russian ban on food imports from a number of countries that have introduced anti-Russian sanctions have seriously weakened the company’s position in the Russian market. According to last statements in 2014, the revenue of Stockmann Department stores in Russia amounted to €240 million, an operating loss of €26 million (in 2013 the loss amounted to €6.4 million).

In its reporting on Thursday, the Finnish retailer also said that according to plan in 2016 it will close the remaining ten Lindex stores in Russia (in 2015 was closed nine stores). Earlier, in February of 2014, Stockmann announced plans to close Seppälä stores in Russia, on 1 June of that year their was another 27 — in St. Petersburg, Moscow, Volgograd, Yekaterinburg, Kazan, Omsk, etc.

Stockmann in Russia

The first Russian store of Finnish retailer was opened in the Moscow Gum in 1989 as a joint Soviet-Finnish company “Kalinka-Stockmann”. In 1998, already a regular store Stockmann opened in telcentre “Smolensky passage”, where he worked until 2009. In the 2014 reporting Stockmann was called the Russian market one of the main: in the structure of the group’s revenue in Russia then had a 15.6% more share only Finland — 47,9%, cumulatively as well as in Sweden and Norway is 27.9%. Now Stockmann operates in 16 countries. By the end of 2015, the revenue of Stockmann in Russia and the Baltic countries decreased to €179 million from €209.1 million in 2014, operating loss amounted to €5 million after a profit of €3.8 million a year earlier.