Shops | Experts: Stockmann’s department stores will be sold – “It’s hard to see another option”

Stockmann’s the fate of the department stores is expected to be resolved in the near future, when Lindex Group’s ongoing strategic report is completed.

It is likely that Stockmann’s department stores will be sold out of the Lindex group. This is what the experts interviewed by HS believe.

Now the department stores are part of the Lindex Group, which was previously known as the Stockmann Group.

The most likely buyer candidate is the group’s largest owner, namely Nordic Retail Partners, a consortium formed by the Swiss JC Holding and the Finnish Konstsamfundet foundation.

The alliance formed last spring is the group’s largest individual owner with a 15 percent share.

Previously, the Swiss company also owns the German clothing chain Peek & Cloppenberg and the iconic Magasin du Nord department store chain in Denmark.

“It is clear that Lindex Group wants to get rid of Stockmann’s department stores. It’s hard to see any other option”, assesses the analyst of the analysis company Inderes Rauli Juva.

According to Juva, there is a strong shared view of this in the market.

It’s mainly about whether we can agree on the price.

Also An investor and investment writer known as a long-term shareholder of Stockmann Kim Lindstrom considers it clear that Lindex Group wants to continue its operations without Stockmann’s department stores.

He also considers the sale of department stores to be the most likely exit method. Another, but less likely, way could be diffusion, i.e. the division of Lindex Group into two, Lindström speculates.

At that time, the owners of Lindex Group could be given shares in the department store company. It would be likely that the Swiss owner’s coalition would later make a purchase offer for the shares.

The current group consists of the Lindex and Stockmann divisions.

The sale is about the business of Stockmann department stores. The iconic department store property in the center of Helsinki was already sold two years ago to the pension company Keva, so that Stockmann could get money to pay off debts. Other department stores also operate in rented premises.

Department stores fate as part of Lindex Group has been clarified since last fall.

At that time, the company started a strategic evaluation, the purpose of which is to find out strategic alternatives for the department store business and to change the name of Stockmann Group to Lindex Group.

The name changed last March. In turn, the company has promised to report on the results of the strategic evaluation during this year.

It is expected in the market that the decision may be ready to be announced after Stockmann’s last legal dispute regarding the termination of the lease agreement is concluded. It could happen soon.

After that, the renovation program that started in spring 2020 can also be recorded as completed. Sales of department stores can of course be done without this.

When last fall, the group reported on a strategy report, it listed three possible options for department stores. One of them was “possible ownership changes or strategic partnerships”.

Juva estimates that even a strategic partnership would probably only be an intermediate step in order to eventually sell the department stores.

Other options, i.e. maintaining the current structure or increasing the independence of the department store business in the group, are unlikely in Juva’s opinion. The Lindex and department store divisions already operate quite independently.

Regardless of whose ownership the department stores end up in, there may be some department store closures to improve profitability, Juva estimates.

In his opinion, the department stores located in Vantaa’s Jumbo, Helsinki’s Itäkeskus and Espoo’s Tapiola could be targets to be closed.

However, you shouldn’t make the chain too small. Large fixed costs mean that sales must also be completed.

Hardly anything would threaten the iconic department store in the center of Helsinki. It brings the largest slice, i.e. 30 percent, of the Stockmann division’s turnover.

In Juva’s opinion, a suitable combination could be, for example, department stores in the center of Helsinki, Turku and Tampere.

Size The group’s result has been dependent on the Swedish women’s clothing chain Lindex for years. It has made a profit and supported the group when the Stockmann department stores have suffered from one crisis to another.

Two thirds of the entire group’s turnover comes from the Lindex division. More than half of its turnover comes from Sweden.

The management of the entire group has also been in Swedish hands since I led Lindex Susanne Ehnbåge became the leader of the entire Stockmann group last year.

Possible there are hardly many buyers for Stockmann’s department store operations, at least not if they don’t want to give away loss-making department stores for free. Department stores are in trouble all over the world.

When the Swiss company became the owner of Stockmann, it also opened the way for a possible ownership solution, according to Juva. The company has interest and know-how in the department store business.

It is likely that the price will remain cheap even now. The most important thing for Lindex Group is to get rid of loss-making department store operations.

“Losing business hardly pays very much, even if it is desirable from the point of view of other shareholders,” Lindström points out.

The company’s share price has gone downhill over the years.

However, Stockmann’s brand is valuable, Lindström reminds.

Juva believes that selling off the department stores would increase the value of the entire Lindex Group, even if the price remains close to zero.

Per individual share, this could mean a price increase from the current level of less than three euros to four euros, i.e. an increase in value of more than 35 percent.

If the department stores instead remained part of the Lindex Group, it could push the exchange rate down to the level of two euros, according to Juva.

Lindström also expects the sale decision to bring a boost to Lindex’s share price. He also believes that the mere completion of the company restructuring will raise the exchange rate, because it clarifies the company’s situation

“I’m not going to give up the shares until the situation is resolved,” says Lindström.

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