Stockmann plc is to streamline its operations in order to turn its earnings performance around. To this end, it is launching an efficiency programme with an annual cost savings target of EUR 50 million.
Article continues below
The programme includes planned store closures and various measures to decrease costs and inventories. The goal is to simplify and speed up processes in the support functions, improve cooperation models with suppliers and develop the organisation’s operating practices, thereby better serving the store operations and improving customer service in line with the new strategy.
Evaluating the size of the store network is an integral part of the efficiency programme. Stockmann is planning to close down four loss-making department stores. Three of these department stores are located in Mega shopping centres in the Moscow region in Russia.
The aim is to close down the stores by the end of 2016, after which Stockmann would focus in Russia on its two remaining Moscow department stores located closer to the city centre and on the stores in St Petersburg and Ekaterinburg.
Stockmann is also considering closing down its department store in Oulu, as the current lease agreement will expire in 2017. As a consequence, co-determination negotiations affecting all employees at the store will be started. The Oulu store currently employs around 230 people, of whom around 90 are full-time employees.
Due to the insecure outlook for the retail market in Russia, Lindex is also planning to close down its stores in Russia. The fashion chain currently has 19 stores in Russia. Lindex will focus on strengthening its operations in its main markets and expanding in other markets. The first Lindex store in the UK will be opened in London in March.
As part of the programme, Stockmann is reviewing its support functions, and the savings measures in these functions will be specified during the spring. Centralising warehouse operations at a single new distribution centre in 2016 will also reduce costs, as announced earlier.
The efficiency programme does not include any sales staff reductions in the continuing department stores. The new operating model for the department stores in Finland was introduced in September along with a centralised customer service centre.
The effects of the programme will be reflected in Stockmann's earning mostly beginning in 2016. The total targeted cost savings impact is expected by the end of 2016. ■