Stockmann, the Finnish retail giant, has reported a Q2 operating loss of €3.1 million due to the impact of the coronavirus pandemic. The company’s department stores were unable to attract shoppers for much of the April to June period, resulting in a significant decrease from the €10.2 million profit made in the same period last year. Revenue also dropped from €242.3 million to €182.7 million, with the gross margin falling from 58.6% to 54.1%.

Despite these challenging circumstances, Stockmann CEO Jari Latvanen remains optimistic about the company’s future. Latvanen highlighted how the company’s transformation and efficiency measures helped mitigate some of the losses incurred from the pandemic. Swift adjustments and cost-saving measures in both Lindex, the subsidiary which filed for corporate restructuring in April, and Stockmann reduced fixed costs by approximately €35 million compared to the previous year. The corporate restructuring will also provide an opportunity for the renegotiation of store lease deals, with a draft restructuring program set to be introduced in December.

Stockmann adjusted its strategy to adapt to the pandemic and lockdowns by holding its main spring campaign exclusively online and developing new services to accommodate the restrictions. Additionally, the company implemented cost-cutting measures, including furloughs, to reduce expenses. However, the restrictions still had an impact on Stockmann’s stores in the Baltic countries, and the Lindex store chain was affected in all market areas.

Despite the challenges faced and store closures impacting revenue, Stockmann performed better than expected since the beginning of the lockdown period in March, particularly in the home and beauty categories. The company also had lower capital tied up in stock compared to the previous year for Q2 and saw a significant strengthening of its cash reserves. Furthermore, as coronavirus restrictions lifted, customer flows increased at both Stockmann department stores and Lindex stores.

Online sales remained a strong growth driver for both Stockmann and Lindex in Q2 and throughout the first half of the year. Stockmann introduced approximately 50 new brands and fulfilled more online store orders in Q2 than it did in the entire previous year. Lindex’s online store experienced an impressive 102% growth rate in the quarter.

Although Stockmann faced losses, it is evident that the company is adapting to the challenges posed by the pandemic. Through further restructuring and a continued focus on online sales, Stockmann aims to recover and strengthen its position in the market.

Useful links:
1. Stockmann Official Website
2. Lindex Official Website