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27.4.2004

Stock Exchange Release

STOCKMANN GROUP’S INTERIM REPORT JANUARY

STOCKMANN plc STOCK EXCHANGE RELEASE April 27, 2004, at 11.45

STOCKMANN GROUP’S INTERIM REPORT JANUARY 1 – MARCH 31, 2004

The Stockmann Group’s sales grew by 5.6 per cent to EUR 402.9 million (EUR
381.4 million in 2003). Profit on ordinary operations improved by EUR 5.1
million. The Department Store Division, Vehicle Division and Seppälä
Division reported higher operating profits and the Hobby Hall Division’s
operating profit was on a par with the same period a year ago. Profit
before extraordinary items was EUR 4.8 million. The corresponding figure a
year earlier, EUR 12.5 million, included EUR 12.8 million of other
operating income. The earnings estimate for 2004 is unchanged.

Sales and result

Stockmann’s consolidated sales in the first quarter of 2004 were EUR 402.9
million, up EUR 21.5 million and 5.6 per cent on same-period sales. Net
turnover was EUR 336.0 million, increasing by 5.4 per cent on the
comparison period.

The gross margin on the Group’s operations grew by EUR 9.9 million to EUR
103.1 million. The relative gross margin on operations improved in all the
divisions and was 30.7 per cent (29.2 per cent). Operating costs increased
by EUR 5.7 million and depreciation by EUR 0.2 million. Profit on ordinary
operations increased by EUR 4.0 million and, in addition, net financial
income increased by EUR 1.1 million. These factors improved profit on
ordinary operations before extraordinary items by a total of EUR 5.1
million on the same period a year earlier. There was no other operating
income in the report period. In the comparison period, other operating
income of EUR 12.8 million was obtained from the disposal of the Tapiola
department store property. Accordingly, consolidated operating profit
diminished by EUR 8.8 million.

Net financial income increased by EUR 1.1 million to EUR 3.1 million
thanks to the rise in liquid assets and gains on foreign exchange.

Consolidated profit before extraordinary items was EUR 4.8 million, down
EUR 7.7 million on the result a year earlier. Direct taxes were EUR 1.4
million, decreasing by EUR 2.3 million on the figure a year earlier. Net
profit for the report period was EUR 3.4 million, compared with EUR 8.9
million a year earlier.

Earnings per share were EUR 0.06 (EUR 0.17). Equity per share was EUR 9.08
(EUR 9.45).

Sales and earnings trend by division

The Department Store Division’s sales grew by 8 per cent to EUR 199.6
million. Sales in Finland grew by 5 per cent, boosted in part by the first
day of the Crazy Days campaign, which came on the last day of March,
unlike in the comparison period. Then again, sales were reduced by the
transfer of Academic Bookstore’s magazine business to Suomalainen
Kirjakauppa in June 2003. Sales in Russia grew both in rouble and euro
terms. In Russia, Stockmann went over to rouble pricing from its previous
dollar-based pricing towards the end of January 2004. The positive trend
in operations in Russia was attributable partly to a lowering of the value
added tax and the abolishment of sales tax at the beginning of the year.
Sales in Estonia also grew. Sales by International Operations were
furthermore lifted by the Riga department store, which was opened in
Latvia in October 2003. Sales by International Operations grew by 26 per
cent and their share of the division’s sales rose to 18 per cent (15 per
cent). The Department Store Division’s operating profit increased by EUR
2.5 million to EUR 0.7 million (a loss of EUR 1.8 million in Jan.-Mar.
2003). Earnings were burdened by the pre-opening costs of the Mega South
department store that was opened in Moscow on April 17, 2004, as well as
the costs of starting up the Riga department store.

Following the exceptionally strong growth in vehicle sales in 2003 after
the car tax was lowered, the growth in vehicle sales in Finland evened out
in the first part of 2004. The Vehicle Division’s sales grew by 4 per cent
to EUR 117.9 million. Unit sales of new vehicles fell by 8 per cent and
those of used vehicles grew by 6 per cent. Stockmann’s market share of the
motor trade in the Helsinki metropolitan area decreased slightly. The
division’s operating profit improved and was EUR 1.9 million (EUR 1.7
million).

The Hobby Hall Division’s sales totalled EUR 56.6 million (EUR 57.8
million). Despite the decrease in the overall distance retail market,
Hobby Hall’s distance retail sales grew by 5 per cent in Finland. Online
sales showed especially strong growth. Sales in Finland nevertheless were
down one per cent on the previous year because the figure for the
comparison year includes the sales of three stores that were closed. The
division’s sales abroad were down 7 per cent on the same period of 2003.
This was attributable to tightened up credit policy as well as the closing
of one store in Estonia at the end of 2003. The division’s operating
result was at the previous year’s level and was a loss of EUR 0.7 million.
The relative gross margin improved slightly on the comparison period. The
profitability-boosting measures that were launched towards the end of 2003
have fed through into expenses and the gross margin according to plan.
They will improve the gross margin further in the second quarter.

The Seppälä Division’s sales increased by 9 per cent on the first quarter
of 2003 and were EUR 28.6 million. Seppälä’s sales grew both in Finland
and the Baltic countries, where sales were lifted by the stores opened in
Latvia towards the end of 2003. Thanks to higher sales and an improved
relative gross margin, Seppälä’s operating result increased by EUR 1.1
million and was a loss of EUR 0.8 million (a loss of EUR 1.9 million).
Owing to good stock and category management, Seppälä achieved a further
improvement in the relative gross margin.

Financing and invested capital

Liquid assets amounted to EUR 88.6 million at the end of the report
period, as against EUR 59.6 million a year earlier and EUR 121.3 million
at the end of 2003.

Loan repayments were not made during the report period, nor have new long-
term loans been drawn down. The amount of long-term loans at the end of
March was EUR 49.2 million. Capital expenditures came to a total of EUR
17.6 million. The increase in working capital from the beginning of the
year to the end of March was EUR 27.8 million. This increase was
attributable primarily to larger stocks and trade debtors for the new
department stores in Riga and Moscow. Subscriptions made by exercising the
1997 share options added EUR 0.3 million to shareholders’ equity in
January. The dividend for 2003 according to the resolution of the Annual
General Meeting on March 30, 2004, a total of EUR 70.5 million, was paid
out in mid-April. In the Interim Report it is treated as a dividend and a
liability to the company’s shareholders. As a result of this, the equity
ratio declined to 59.9 per cent from 68.3 per cent at the end of 2003. At
the end of the comparison period the equity ratio was 63.5 per cent.

The return on capital employed over the past 12 months diminished in line
with the decrease in earnings and was 13.0 per cent (15.2 per cent). The
Group’s capital employed increased from March of the previous year,
notably because of the capital invested in the new department stores in
Riga and Moscow, and amounted to EUR 545.9 million at the end of the
report period (EUR 538.5 million). Invested capital was reduced owing to
the growth in the dividend liability from EUR 45.9 million to EUR 70.5
million due to larger dividends than last year.

Capital expenditures

Capital expenditures during the report period totalled EUR 17.6 million
(EUR 6.0 million).

The Department Store Division’s capital expenditures in the report period
came to EUR 13.1 million. The division’s most important investment outlay
was for the new Mega South department store in Moscow that operates in
premises leased from Ikea and was opened on April 17. Its operations have
got off to a very good start. During the report period the department
store required an outlay of EUR 11.4 million. The department store has
approximately 10 000 square metres of retail space, and Stockmann’s
capital expenditure for the site is about EUR 19.0 million. In Moscow the
landlord is also carrying out construction works on the Mega North
department store which will have about 10 000 square metres of retail
space too. According to plans, it will be opened at the end of 2004 in
premises owned by Ikea. Stockmann’s share of the capital expenditure for
this site too will come to slightly less than EUR 20 million. In Russia,
interior decorating work on the second Zara store is in progress. The
store will be opened at the end of May right near the centre of Moscow. A
Zara store will be opened in the Mega North Shopping Centre towards the
end of the year. The seventh store in the Stockmann Beauty cosmetics chain
was opened in Kuopio in March.

The Hobby Hall Division’s capital expenditures in the report period
totalled EUR 0.4 million. They went mainly for the development of
information systems.

Seppälä’s capital expenditures in the report period came to EUR 0.2
million. Seppälä opened its first store in Russia at the Stockmann
department store in Moscow’s Mega South Shopping Centre on April 17.
Seppälä’s sales in Moscow have also got off to a very good start. Seppälä
is going to open a store in Moscow’s Mega North Shopping Centre for the
Christmas trade in 2004.

Investments in real-estate property during the report period totalled EUR
3.6 million, of which EUR 2.1 million went for the Audi showroom that will
be used by the Vehicle Division in Espoo’s Suomenoja district and EUR 0.5
million was spent on preparatory works for the enlargement of the Helsinki
department store. The Audi showroom will be realized by enlarging the
Stockmann-owned building that is used by the Vehicle Division. According
to plans, the Audi showroom that will serve the Helsinki metropolitan area
and its environs will go into operation in summer 2004.

Other capital expenditures in the report period amounted to EUR 0.4
million.

Current projects

Stockmann has signed an agreement on opening a department store with about
11 000 square metres of retail space in leased premises in the new section
of the Jumbo Shopping Centre in Vantaa. The target completion date for the
department store is in time for the Christmas market in 2005.

A large-scale project for enlargement and modification works on the
department store in the centre of Helsinki is pending. According to the
plan, the department store’s commercial premises will be expanded by about
10 000 square metres by converting existing premises to commercial use and
by building new retail space. In addition, completely new goods handling
and maintenance areas will be built as well as access passages to the new
customer car-park. After the enlargement the Helsinki department store
will have about 50 000 square metres of retail sales space. The project
has a total cost estimate of about EUR 115 million. Implementation of the
project will call for modifying the town plan, a process that has already
been started.

Stockmann has made an agreement with VV-Auto Oy, which is owned by Kesko
Corporation, on termination of the lease agreement for the VW-Audi car
dealership in Helsinki’s Herttoniemi district by December 31, 2004 at the
latest.

The Hobby Hall Division will centralize its Latvian and Lithuanian
functions in Latvia during autumn 2004.

A change in the organization

Klaus Sundström (53), M.Sc. (Econ.), has been appointed the new director
of Stockmann’s Vehicle Division and a member of the Group’s Management
Committee, effective April 2, 2004. The division’s previous director, Esa
Mäkinen, will join another company.

Annual General Meeting

The Annual General Meeting held on March 30 resolved that a dividend of
EUR 0.90 per share is to be paid for the 2003 financial year as well as a
bonus dividend of EUR 0.45 per share, or a total of EUR 1.35 per share.
The total dividend payout amounted to EUR 70.5 million.

The Annual General Meeting approved the Board of Directors’ proposal for
amending the provision concerning the term of office of a member of the
Board of Directors as set out in Article 5 of the Articles of Association
such that the members of the Board of Directors are to be elected for one
year at a time.

The Annual General Meeting resolved, in accordance with the proposal of
the Board’s Appointments and Compensation Committee, that seven members be
elected to seats on the Board and re-elected from among the Board’s
present members Lasse Koivu, managing director, Föreningen Konstsamfundet
r.f.; Erkki Etola, managing director, Oy Etola Ab; Professor Eva
Liljeblom; Kari Niemistö, managing director, Oy Selective Investor Ab;
Christoffer Taxell, LL.M., and Henry Wiklund, managing director, Svenska
litteratursällskapet i Finland r.f. for a term of office up to the end of
the next Annual General Meeting. Following the notification of Erik
Anderson, LL.M., that he did not wish to stand for election, Carola Teir-
Lehtinen, Senior Vice President, Corporate Communications, Fortum
Corporation, was elected a new member in accordance with the Committee’s
proposal.

At its organization meeting on March 30, 2004, the Board of Directors re-
elected Lasse Koivu chairman and Erkki Etola vice chairman.

Re-elected as regular auditors were Wilhelm Holmberg, Authorized Public
Accountant, and Henrik Holmbom, Authorized Public Accountant. KPMG Wideri
Oy Ab continues to act as the deputy auditor.

The Annual General Meeting passed a resolution to authorize the Board of
Directors to decide on transferring a maximum of 413 000 of the company’s
own Series B shares (treasury shares) in one or more instalments. The
authorization will be valid for one year.

Shares and shareholders

The company’s market capitalization at the end of March was EUR 941.1
million (EUR 705.2 million). At the end of 2003, the market capitalization
was EUR 955.6 million.

Stockmann’s shares underperformed both the HEX All-Share Index and the HEX
Portfolio Index during the report period. At the end of March the stock
exchange price of the Series A share was EUR 17.79, compared with EUR
18.00 at the end of 2003, and the Series B share was selling at EUR 17.95,
as against EUR 18.30 at the end of 2003.

The 1997 Stockmann share options were exercised to subscribe for a total
of 20 300 Stockmann plc Series B shares with a par value of 2 euros in
January. As a consequence of the subscriptions, the share capital was
increased by EUR 40 600. Following the increase the share capital is 105
299 282 euros. The shares were entered in the Trade Register on February
20, 2004, and they became available for public trading, together with the
old shares, on Helsinki Exchanges on April 5, 2004.

At its meeting held on February 12, 2004, Stockmann plc’s Board of
Directors approved a shareholder’s request to convert 163 000 of the
company’s shares from Series A into Series B shares in accordance with
Article 3 of the Articles of Association. The share conversion was entered
in the Trade Register on February 20, 2004. The converted shares became
eligible for public trading together with the old shares as from February
23, 2004. Following the share option subscriptions and the share
conversion, the total number of Series A shares is 24 575 893 and the
number of Series B shares is 28 073 748.

Stockmann held 413 000 of its own Series B shares at the end of March
2004. The nominal value of these shares is a total of EUR 826 000, and
they represent 0.8 per cent of all the shares outstanding as well as 0.2
per cent of the total votes. The shares were purchased for a total price
of EUR 6.2 million.

The company’s Board of Directors does not have valid authorizations to
increase the share capital or to float issues of convertible bonds or
bonds with warrants or to buy back its own shares.

Personnel strength

During the report period the Stockmann Group had an average payroll of 8
652 employees, or 462 more than in the comparison period. The growth in
the number of employees was attributable mainly to the new department
stores in Riga and Moscow. Converted to full-time staff, the average
number of employees increased by 466 and was 7 092.

At the end of March 2004 the number of staff working abroad was 2 073
people. At the end of March 2003, Stockmann had 1 434 people working
abroad.

Full-year outlook

Retail sales, including the motor trade, are estimated to grow further in
Finland. The economies of Russia and the Baltic countries are anticipated
to continue growing at a faster rate than the Finnish economy. The
Stockmann Group’s sales growth is estimated to outpace the overall market
growth. Sales in 2004 are estimated to top EUR 1.8 billion.

The Group’s second-quarter profit on ordinary operations is anticipated to
improve on the previous year’s figure. The operating profit figures for
the Department Store Division, Hobby Hall Division and Seppälä Division
are estimated to increase from the second quarter of 2003, with the
Vehicle Division’s operating profit at the level of the comparison period.
The earnings estimate for 2004, which was stated in the Annual Report, is
unchanged. Stockmann’s target is for profit before extraordinary items in
2004 to be higher than the figure reported for 2003.

Helsinki, April 27, 2004

STOCKMANN plc

Profit and loss account, Group EUR millions