HELSINKI: Stockmann on Friday announced it has agreed to offload all six of its loss-making grocery shops, Stockmann Herkku, in Finland to the S Group for a debt-free price of 27 million euros.
The divestment is expected to generate a one-off profit of three million euros and improve the profitability of the struggling department store chain as of next year. Stockmann, regardless, refrained from specifying its guidance for 2018.
“Stockmann must make strategic decisions to achieve profitable growth. The procurement and logistics operations of the grocery business, especially, have had an effect on the competitiveness of Stockmann Herkku,” Lauri Veijalainen, the chief executive of the iconic department store chain, commented in a press release.
Stockmann Herkku, he assured, will remain a key part of the department stores regardless of the sale. “We have found an excellent partner in the grocery trade sector with the willingness and resources to develop Herkku in a competitive way and continue to provide first-rate services and selection to our customers,” he added.
All of the roughly 800 people currently employed by Stockmann Herkku will move to the payroll of the S Group.
The six grocery shops will become the flagship shops of the grocery chain of the S Group, revealed Arttu Laine, an executive vice president at the retail co-operative. “We want to set the bar for quality to a European level, and Herkku’s skilled staff will have an absolutely key role in that respect. We have a lot to learn from them,” he stated in a press release.
The transaction requires the approval of the Finnish Competition and Consumer Authority (KKV). Stockmann expects to be able to complete the transaction by the end of the year barring any unforeseen complications in the approval process.
Stockmann will continue to operate its grocery shops in the Baltics, where its grocery operations are profitable account for a larger proportion of all sales than in Finland.
