Lindex owner Stockmann to file for corporate restructuring
Finnish retail giant Stockmann said Monday that the coronavirus epidemic in Europe” has caused significant changes in the operating environment of [the] group, with customer volumes decreasing suddenly”. It means cash flows have been hit hard and the Stockmann and Lindex owner will file for restructuring proceedings for Stockmann plc.
Despite continued strong growth in recent weeks in the webstores of both of its retail brands, online sales growth hasn’t been able to compensate for the “drastic decline in customer volumes in the current exceptional situation,” it explained.
It said the company’s business “remains viable and can be restored to a sound basis,” but the coronavirus and the restrictions it has caused “have, and will continue to have, a significant impact on the company’s customer volumes and cash flow”.
So what exactly does the corporate restructuring mean? Well, for a start, its group subsidiaries, including the Stockmann department stores in the Baltics and the Lindex chain, “are not in [the] scope of the restructuring proceedings”.
The application for the parent company restructuring was filed at the Helsinki District Court on Monday with the firm saying it had discussed its intention with its bank syndicate and certain other major creditors. The creditors in question “who represent over one fifth of the known creditors of the company, have preliminarily indicated a positive stance to the filing”.
The firm also said that its “business renewal [was] on the right track until the coronavirus epidemic”.
Last year it renewed its strategy and launched a performance improvement programme at the department stores and at Lindex, targeting cost savings and other performance improvements. The separate units’ sales have been improving and the company has also managed to cut its overall debt level.
“Stockmann and Lindex have been working very hard to develop and renew the company’s business, with the objective of getting both business operations on a growth track by 2021,” said chairman Lauri Ratia. “The strategic choices made in spring 2019 have proven to be correct, and the group’s business operations have developed as planned in 2019 and in January/February 2020.
“However, the unprecedented situation caused by the coronavirus has led to an extreme decline in customer volumes, depleting the company’s cash in hand. In this very difficult situation, the board has decided to file for the corporate restructuring. The board is convinced that with the initiatives already launched, Stockmann Group has the preconditions for profitable business”.
CEO Jari Latvanen added: “Our primary goal at the moment is to secure the preconditions of our business and our jobs. We will continue the rapid development of the Lindex brand into a major European fashion house. We will also continue to develop the Stockmann department stores based on our three key principles: unique, high-quality products; best customer service; and new products from the world to Finland and the Baltics.”
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