The company Stockmann is applying for corporate restructuring due to the coronavirus. The corporate restructuring procedure does not apply to the Group's subsidiaries, i.e. Stockmann department stores in the Baltics, and Lindex. The application has been filed today to the Helsinki District Court.
Corporate restructuring is a last resort to avoid bankruptcy. Corporate restructuring can be achieved if the company is considered to be viable. In the restructuring, the company's debts are arranged so that it can cope with them. The company's Board of Directors decided to apply for corporate restructuration proceedings because it considers that the company's business is recoverable.
Stockmann has discussed the situation with banking syndicates and large creditors. The company says that one-fifth of all the company’s well-known creditors have tentatively expressed a positive view about filing a corporate restructuring application. The amount of interest-bearing liabilities, excluding lease liabilities, at the end of 2019 was EUR 412.3 million.
The company says that the coronavirus epidemic has had a significant impact on the Group's business environment and has dramatically reduced the number of customers. Although the online stores of Stockmann and Lindex has grown strongly in recent weeks, the growth in digital transactions in this exceptional situation is not enough to compensate for the very sharp decline in customer numbers.
On March 18, Stockmann announced that the company's profitability and business volume will decline significantly due to the coronavirus.
At this stage, there are no information what kind of actions the restructuring program will take, i.e. whether some department stores would be closed, for example.
Lauri Ratia, Chairman of the Board of Stockmann, emphasizes that corporate restructuring does not influence to Stockmann's ordinary customers. For example, there is no need to worry about products ordered from the just-ended Crazy Days online. Customers can still buy products in the online store. Loyal customer benefits do not change.
Stockmann Reform Measures:
Stockmann has been in trouble for several years. The measures taken last year began to give results. The company's adjusted result for the last financial year turned positive. According to the company, the business developed better in January-February 2020 than in the previous year.
Stockmann CEO Jari Latvanen says, that they will continue to strongly develop Lindex's brand as one of the major European fashion players, as well as develop the Stockmann department store business. They strongly believe that the Stockmann Group's chosen strategy is the right one.
Stockmann intends to publish new earnings forecast when the market outlook is clearer.
The full information and the source text can be found at Taloussanomat website.
Published 06.04.2020, FINREPO