HELSINKI (Reuters) — Finnish department store operator and fashion chain group Stockmann said it would close fashion shops in Russia and seek to sell its mail-order business as part of a strategy review, sending its shares higher.
Stockmann has been hard hit as consumers shift from upscale department stores to online shopping, while the weakened Russian ruble and a recession in Finland have exacerbated its problems.
Its chief executive Hannu Penttila stepped down in August and the company kicked off a strategy review.
It said on Thursday it would close 16 remaining Seppala fashion stores in Russia and would look at strategic options for the loss-making chain, which has annual sales of around 120 million euros, or $152 million.
It said it would focus on its bigger fashion chain Lindex, for which it nominated new board members and which is launching a one-off collection with Jean Paul Gaultier later this month.
It also said it was seeking a buyer for its mail order business Hobby Hall, with sales of 100 million euros.
Shares in the company, still down 19 percent this year, rose 4.7 percent to 8.98 euros in early trading.
Sauli Vilen, head of research at Inderes Equity Research, said it looked like Stockmann was preparing to shed all its fashion businesses.
“Seppala is in a very bad shape (and) … The changes in Lindex management indicate they are preparing to sell that chain,” he said. “Stockmann needs money to cut debt and focus and reshape its core department store business.”
Stockmann said it would continue the strategy review until year-end and the process of appointing a new ceo was proceeding.
Stockmann in August forecast its full-year profit would drop significantly from last year. In 2013, Stockmann had sales of around 2 billion euros and operating profit of 54 million euros.
Just under half of Stockmann’s sales come from Finland, with Russia, where it has five large department stores, accounting for 16 percent.