Company News

UPDATE 1-Finnish retailer Stockmann sinks to Q2 loss

(Adds details on online sales, shares)

July 24 (Reuters) - Struggling Finnish retailer Stockmann swung to a second-quarter operating loss as the coronavirus outbreak kept customers away from its department stores, and said it was focused on reducing costs to stave off bankruptcy.

In April, Stockmann filed for corporate restructuring, a form of administration in which a court appointee is charged with restructuring the company to avoid bankruptcy.

The company said on Friday it made an operating loss of 3.1 million euros ($3.6 million) in April-June, compared with a profit of 10.2 million euros a year earlier.

Shares in Stockmann fell 3% to 0.98 euros in early trade.

“The global coronavirus pandemic has had a profound impact on our business performance, but this spring’s transformation and efficiency measures have produced results,” Chief Executive Jari Latvanen said in a statement.

Both of the company’s divisions, department stores and fashion chain Lindex, reported doubling online sales this year, Latvanen said.

“Swift adjustment measures in both Lindex and Stockmann, combined with last year’s cost savings programme, reduced the group’s fixed costs by about 35 million euros compared with the previous year,” he added.

Known for its upmarket department stores, Stockmann has struggled in recent years in the face of a consumer shift to online shopping, prompting cost cuts and divestments.

“The corporate restructuring of the Stockmann parent company will make it possible to renegotiate the terms of the lease agreements, with the aim of achieving a lower cost level,” Latvanen said.

Stockmann said it was working on drawing up a draft restructuring programme, which has to be presented to court by Dec. 11.

The company has reported annual net losses since 2013 and at the end of last year its net debt amounted to 900 million euros.

$1 = 0.8629 euros Reporting by Tarmo Virki in Tallinn; Editing by Mark Potter