Annual Report 2008 Hobby Hall, online in Estonia at 1 p.m. Lindex, Oslo, at 12.00 noon Stockmann, Vantaa, at 1 p.m. Seppälä, Novosibirsk, at 6 p.m. 1 Stockmann in brief Report and Accounts 31 December 2008 Contents 2 Information for shareholders 48 Board report on operations 4 Stockmann’s commercial operations 57 Shares and share capital 6 Stockmann in 2008 62 Key fi gures 7 Divisions in short 63 Per-share data 8 Major events in 2008 64 Defi nition of key indicators 10 CEO’s review 65 Consolidated income statement 12 Board of Directors and auditors 66 Consolidated balance sheet 13 Corporate management 68 Statement of change in equity 69 Consolidated cash fl ow statement Review of operations 70 Notes to the consolidated fi nancial 14 Department Store Division statements 20 Lindex 97 Parent company income statement 24 Hobby Hall 98 Parent company balance sheet 28 Seppälä 99 Parent company cash fl ow statement 100 Notes to the parent company 32 Corporate Governance fi nancial statements 35 Risk management 106 Proposal for the distribution of parent 36 Corporate social responsibility company profi t 44 Personnel 107 Auditors’ report 108 Contact information Customer orientation Commitment Stockmann We earn money only by offering In all our activities, success calls for Group’s benefi ts which the customer an understanding of the importance perceives as real and better than of Stockmann’s company-wide core values those of our competitors. The success factors and the role of our sum total of these benefi ts is high own unit in achieving them as well customer satisfaction and loyalty. as a commitment to the goals we all Competitive pricing, reliable quality share together. and good customer service are vital Profi t orientation elements in achieving these goals. We are in business to make money; all our operations should support this Respect for our people goal. Healthy earnings mean a good We respect and value people’s return for investors and latitude of capacity for commitment, taking movement and risk-taking ability for calculated risks and producing result. the company. For good people who Effi ciency We reward success. are committed to our common goals, By performing better than our it means a highly respected job and competitors, we boost sales, an opportunity for self-development. secure high cost-effectiveness and use capital effi ciently. Social responsibility Our way of operating is ethical, just and shows respect for environmental values. Stockmann in brief Stockmann is a Finnish listed company which was established in 1862 and is engaged in the retail trade. It has more than 40 000 shareholders. Customer satisfaction is the central objective of Stockmann’s trading in all its areas of business. Stockmann’s four divisions are the Department Store Division, fashion chains Lindex and Seppälä, and Hobby Hall, which is specialized in distance retail. The Stockmann Group's store chains operate in Finland, Sweden, Norway, Russia, Estonia, Latvia, Lithuania, the Czech Republic, Ukraine and Saudi Arabia. Stockmann's Annual Report 2008 Stockmann in brief 1 Long-term fi nancial targets return on ebit on revenue sales growth equity ratio capital employed Above target set in 2001 Minimum 15 % Minimum 5 % industry average actual 2001 9.8 % 3.6 % Achieved actual 2002 12.6 % 4.7 % Achieved actual 2003 13.2 % 4.7 % Achieved actual 2004 14.3 % 4.9 % Achieved target set in 2005, Above Minimum 20 % Minimum 8 % Minimum 50 % up to 2010 industry average actual 2005 19.6 % 6.7 % Achieved 66.4 % target set in 2006, Above 22.0 % 10.0 % Minimum 50 % up to 2011 industry average In line with actual 2006 22.9 % 10.0 % 74.5 % industry average In line with actual 2007 12.1 % 9.0 % 32.6 % industry average target set in 2008, Above Minimum 20 % Minimum 12 % Minimum 40 % up to 2013 industry average In line with actual 2008 8.3 % 6.5 % 39.0 % industry average The Group structure underwent a major change following the acquisition of Lindex towards the end of 2007. Consequently, the Board of Directors reassessed the Group’s long-term fi nancial targets on 18 June 2008. Dividend policy Stockmann’s Board of Directors has set the dividend payout target at more than half of the earnings derived from the company’s ordinary operations. The fi nancing required to grow operations is nevertheless taken into account in determining the dividend. Information for shareholders Annual General Meeting A shareholder shall have the right to have a matter which The 2009 Annual General Meeting of the shareholders of falls under the jurisdiction of the Annual General Meeting Stockmann plc will be held on Tuesday 17 March 2009 at handled at a General Meeting of the Shareholders if he 4.00 p.m. in the Concert Hall of Finlandia Hall at the address presents a written request therefore to the Board of Directors Karam zininkatu 4, Helsinki. early enough for the matter to be included in the notice to Registrations for the meeting must be received no later convene the meeting. than on 10 March 2009 at 4.00 p.m., telephone +358 9 121 3260 or the company’s website www.stockmann.com. Payment of dividend Those shareholders are entitled to participate in the Annu- The Board of Directors proposes to the Annual General Meet- al General Meeting, who have been entered on 6 March 2009 ing that a dividend of EUR 0.62 per share be paid for the as shareholders in the Shareholder Register kept by Euroclear 2008 fi nancial year. The dividend decided by the Annual Gen- Finland Ltd. eral Meeting will be paid to a shareholder who on the record 2 Stockmann's Annual Report 2008 Information for shareholders date for dividend payment, 20 March 2009, has been entered Financial information on Stockmann in the Shareholder Register kept by Euroclear Finland Ltd. Stockmann will publish the following fi nancial reports in The Board proposes to the Annual General Meeting that the 2009: dividend be paid on 2 April 2009. – January–March Interim Report 23 April 2009 The Board also proposes that it be authorised to decide at – January–June Interim Report 4 August 2009 its discretion on the payment of a dividend of no more than – January–September Interim Report 22 October 2009 EUR 0.38 per share, the company's fi nancial standing permit- In addition to these reports, we will release a monthly re- ting, in addition to the above-mentioned dividend decided by port on the sales by the units. the Annual General Meeting. The Board must make its deci- Financial reports and releases are published in Finnish, sion by 31 December 2009. Any dividend paid on the basis Swedish and English. of the Board's decision will be paid to shareholders who are All of Stockmann’s stock exchange releases will be avail- entered, on the record date decided by the Board, in the Share- able on the internet on their date of publication. Address: holder Register kept by Euroclear Finland Ltd. The Board will www.stockmann.com. decide on the record date and on the date of dividend payment, which may not occur before fi ve banking days have elapsed, Investor Relations: inclusive of the record date. e-mail [email protected] Changes in name and address Report and release requests: We kindly request shareholders to report changes of address STOCKMANN, Corporate Communications to the bank or to Euroclear Finland Ltd in accordance with the P.O. Box 147, FI-00381 Helsinki, Finland place where the shareholder’s book-entry account is kept. Telephone +358 9 121 3089 Fax +358 9 121 3153 e-mail [email protected] Information on Stockmann for investors According to information we have received, the analysts mentioned below follow Stockmann on their own initiative. The list may be incomplete. Stockmann does not assume responsibility for analysts’ assessments. ABG Sundal Collier Deutsche Bank Goldman Sachs SEB Enskilda Equities Equity Research Stefan Lycke Emanuele Cagnoni Jutta Rahikainen Timo Heinonen Stureplan 4 A Peterborough Court Unioninkatu 30 Regeringsgatan 65, 5tr 11487 Stockholm 133 Fleet Street 00100 Helsinki 10389 Stockholm Tel. +46 (0) 8 463 5500 London EC4A 2BB Tel. +358 (0) 9 6162 8713 Tel. +46 (0) 8 5662 8644 Tel. +44 (0) 20 7552 5944 eQ Bank Ltd Sofi a Pankki Oyj Carnegie Investment Bank AB, Jarkko Soikkeli Handelsbanken Capital Martin Sundman Finland Branch Mannerheiminaukio 1 A Markets Kaisaniemenkatu 1 C Tia Lehto 00100 Helsinki Maria Wikström 00100 Helsinki Eteläesplanadi 12 Tel. +358 (0) 9 6817 8654 Aleksanterinkatu 11 A Tel. +358 (0) 10 241 5166 00130 Helsinki 00100 Helsinki Tel. +358 (0) 9 6187 1236 Evli Bank plc Tel. +358 (0) 10 444 2425 Standard & Poor's Mika Karppinen James Monro Credit Agricole Chevreux Aleksanterinkatu 19 A Nordea Bank Finland plc 20 Canada Square Daniel Ovin 00100 Helsinki Hanna-Maria Heikkinen Canary Wharf Regeringsgatan 38 Tel. +358 (0) 9 476 690 Aleksis Kiven katu 9 London E14 5LH 10393 Stockholm 00500 Helsinki Tel. +44 (0) 20 7176 7798 Tel. +46 (0) 8 723 5175 FIM Tel. +358 (0) 9 1655 9926 Jonas Spohr Danske Market Equities Pohjoisesplanadi 33 A Pohjola Bank plc Kalle Karppinen 00100 Helsinki Jari Räisänen Unioninkatu 22 Tel. +358 (0) 9 6134 6508 Teollisuuskatu 1 B 00130 Helsinki 00510 Helsinki Tel. +358 (0) 10 236 4794 Tel. +358 (0) 10 252 4504 Stockmann's Annual Report 2008 Information for shareholders 3 Stockmann’s commercial operations = Stockmann department store Oulu Tampere Espoo Vantaa Turku Helsinki St Petersburg Tallinn Yaroslavl Riga Ekaterinburg Nizhny Novgorod Moscow Kazan Samara Voronezh Rostov-on-Don 4 Stockmann's Annual Report 2008 Stockmann’s commercial operations Finland Sweden • 7 department stores