STOCKMANN’S FINANCIAL STATEMENT BULLETIN 2005

STOCKMANN plc STOCK EXCHANGE RELEASE February 8, 2006, at 13.00

STOCKMANN’S FINANCIAL STATEMENT BULLETIN 2005

The Stockmann Group’s sales grew by 7 per cent to EUR 1 851.3 million (EUR 1
735.0 million in 2004). Profit before taxes increased by EUR 23.9 million and
was
EUR 102.8 million. Other operating income amounted to EUR 7.0 million (EUR 2.4).
The Group, Seppälä and the Department Store Division turned in their best-ever
results. Hobby Hall’s earnings improved significantly and moved into the black.
Stockmann Auto’s earnings fell. Return on capital employed climbed by 4.8
percentage points to 19.6 per cent. Earnings per share increased to EUR 1.44, as
against EUR 1.13 a year ago. The Board of Directors will propose the payment of
a
dividend of EUR 1.10 per share. In addition, the Board of Directors will propose
a new share option programme for the company’s Loyal Customers and key
employees.

IFRS reporting

Stockmann adopted International Financial Reporting Standards (IFRS) on January
1, 2005. The comparative information used in the financial statements is the
2004
figures according to IFRS, which were published at the annual level on February
15, 2005, and at the quarterly level on April 18, 2005.

Sales and result

Stockmann’s consolidated sales during the report period were EUR 1 851.3
million,
up EUR 116.3 million and 6.7 per cent on the previous year’s sales. Revenue was
EUR 1 542.6 million, increasing by EUR 97.6 million and 6.7 per cent on revenue
a
year ago. International operations accounted for an increased share of
consolidated sales, rising from 14 per cent to 18 per cent.

The Group’s operating gross margin increased by EUR 53.6 million to EUR 547.1
million. The relative gross margin improved further and was 35.5 per cent (34.2
per cent). The relative gross margin improved in Seppälä and Hobby Hall and it
was at the level of last year in the Department Store Division and Stockmann
Auto. The Group had hedged against a weakening in the value of the Russian
rouble. When the rouble strengthened against all expectations, hedging dampened
the positive effect on earnings by around EUR 6 million in 2005. The growth in
the Group’s relative gross margin was also attributable to the change in the
sales mix: the proportion of low-margin Stockmann Auto’s sales within
consolidated sales decreased on the previous year.

Other operating income was EUR 7.0 million (EUR 2.4 million) and resulted from
the capital gain on the sale of Seppälä’s head office property. Operating costs
increased by EUR 30.0 million. Depreciation rose by EUR 4.2 million.

Consolidated operating profit was up EUR 23.9 million on the previous year, and
was EUR 103.7 million, or 6.7 per cent of revenue. The corresponding figure a
year ago was 5.5 per cent. Net financial expenses were EUR 0.9 million or at the
level of last year. Profit before taxes rose by EUR 23.9 million to EUR 102.8
million (EUR 78.9 million).

Direct taxes were EUR 26.0 million, an increase of EUR 6.3 million on the
previous year. The deferred taxes portion of taxes for 2004 diminished due to
the
lowering of Finland’s corporate tax rate from 29 per cent to 26 per cent from
the
beginning of 2005. The lowering of the tax rate reduced the deferred tax
liability for 2004 by EUR 2.6 million.

Net profit for the financial year was EUR 76.9 million, compared with EUR 59.3
million a year earlier.

Earnings per share were EUR 1.44 (EUR 1.13) and diluted for options they were
EUR
1.42 (EUR 1.11). The above-mentioned change in the deferred tax liability
improved earnings per share in 2004 by EUR 0.05. Equity per share was EUR 9.34
(EUR 8.83).

Sales and earnings trend by operating unit

The Department Store Division’s sales grew by 14 per cent to EUR 1 070.6
million.
Sales in Finland were up 7 per cent, clearly outstripping growth in the sector.
Factors that contributed to the growth of sales in Finland were the Stockmann
department store and Zara store that were opened in the Jumbo Shopping Centre in
Vantaa in October as well as the new Stockmann Beauty stores that were opened
during the year. Sales by international operations were boosted by the new
department stores that were opened in Moscow in April and December 2004, the new
Zara and Bestseller stores as well as by good same-store sales growth in all
market areas. Sales by the Department Store Division’s international operations
grew by 42 per cent and their share of the division’s sales rose to 26 per cent
(21 per cent). The Department Store Division’s operating profit increased by EUR
6.6 million to EUR 70.3 million (EUR 63.7 million). The Department Store
Division
posted its best-ever operating profit. Operating profit includes EUR 1.4 million
of other operating income. The return on capital employed was 19.7 per cent
(18.9
per cent).

Stockmann Auto’s sales fell by 5 per cent to EUR 414.1 million. The unit’s
operating profit was EUR 3.1 million, down EUR 3.9 million on the previous year
(EUR 7.0 million). Operating profit for 2004 included an EUR 2.3 million payment
that was received on the sale of the VW-Audi dealership business in Helsinki’s
Herttoniemi district. A major factor behind the drop in both sales and operating
profit was the transfer of the VW-Audi dealership in Herttoniemi to the importer
as from 1 July 2004. The return on capital employed was 4.8 per cent (12.4 per
cent).

Hobby Hall’s profitability improved significantly, and its operating result
increased by EUR 9.0 million. Sales declined by 2 per cent and were EUR 210.5
million. Sales in Finland diminished by 4 per cent owing to the cutback in the
store network and the different timing of the mail order catalogues, compared
with the previous year. Finland’s online sales continued their robust growth.
Hobby Hall’s sales in the Baltic countries were at the level of last year even
though operations in Lithuania were wound up during the first part of the year.
Hobby Hall’s result swung to profit. Operating profit was EUR 6.1 million (a
loss of EUR 2.9 million in 2004). The positive earnings trend was achieved
through cost-efficient operations and by effective execution in carrying through
the programme aiming at improving the gross margin. The return on capital
employed was 7.0 per cent.

Seppälä’s sales increased by 8 per cent and were EUR 155.2 million. Sales grew
buoyantly abroad, where they were lifted by the stores opened in the Baltic
countries and Russia in 2004 and 2005 as well as by the good trend in like-for-
like sales. In Finland, sales grew by 3 per cent. Seppälä’s operating profit
increased by EUR 14.0 million to EUR 31.1 million (EUR 17.1 million). The good
sales growth, coupled with a higher relative gross margin, lifted the profit on
ordinary operations by EUR 8.4 million, in addition to which operating profit
includes a capital gain of EUR 5.6 million on the sale of Seppälä’s head office
property in November. The return on capital employed increased from 81 per cent
to 156 per cent.

Financing and capital employed

Liquid assets at the end of the year were EUR 18.4 million, as against EUR 41.4
million at the end of 2004.

Loan repayments amounted to EUR 36.6 million, and no new long-term loans were
raised. Interest-bearing liabilities at the end of the year were EUR 47.2
million
(EUR 67.8 million), of which EUR 13.7 million consisted of long-term borrowings.
Share subscriptions made through the exercise of Loyal Customer share options
and
the options for the year 2000 added EUR 7.9 million to shareholders’ equity.
Capital expenditures amounted to EUR 57.0 million. Net working capital was EUR
237.9 million, and it increased by EUR 24.7 million from the end of the previous
year. The equity ratio was 66.4 per cent, as against 62.5 per cent at the end of
2004.

Return on capital employed improved in line with higher earnings and was 19.6
per
cent (14.8 per cent at the end of 2004). The Group’s capital employed increased
by EUR 17.0 million from the end of the previous year and stood at EUR 552.5
million towards the end of the report period (EUR 535.9 million at the end of
2004).

New long-term financial targets

In 2005 the Group achieved the long-term financial targets that were set in
2001:
a 15 per cent return on capital employed and an operating profit margin of at
least 5 per cent. In June the Board of Directors confirmed the Group’s new
financial targets up to 2010. The objective is for the Group’s return on capital
employed to reach 20 per cent in 2010, with an operating profit margin of at
least 8 per cent. The target for Group sales is to outpace the market. The
equity
ratio target has been set at a level of at least 50 per cent. The dividend
policy
will remain unchanged, the objective being to pay dividends of at least 50 per
cent of the profit on ordinary operations, nevertheless taking into account the
financing required to grow the business.

Dividends

For 2004, in accordance with the resolution of the Annual General Meeting, a
dividend of EUR 1.00 per share was paid, or a total of EUR 53.0 million. The
Board of Directors will propose to the Annual General Meeting that a dividend of
EUR 1.10 per share be paid for the 2005 financial year. The proposed dividend is
76.4 per cent of earnings per share.

Organizational changes

On June 17, 2005, Stockmann’s Board of Directors appointed Seppälä Oy’s managing
director, Heikki Väänänen, M.Sc. (Econ.), as director of the Department Store
Division and Group executive vice president, effective November 1, 2005. Heikki
Väänänen also acts as the alternate to CEO Hannu Penttilä. The Department Store
Division’s previous head, Jukka Hienonen, Stockmann’s executive vice president,
resigned from Stockmann’s employ to become president and CEO of Finnair.

On August 11, 2005, Stockmann’s Board of Directors appointed the sales director
of Stockmann’s Helsinki department store, Terhi Okkonen, eMBA, as managing
director of Seppälä Oy and a member of the Stockmann Group’s Management
Committee, effective November 1, 2005.
Jussi Kuutsa, M.Sc. (Econ.), head of the Department Store Division’s
international operations, was appointed the Group’s development director for
international operations and a member of the Management Committee effective
January 10, 2006. Mr Kuutsa is responsible for acquiring the Group’s commercial
locations outside Finland and implementing projects as well as for
administrative
functions abroad and the franchising chain businesses.
Stockmann’s company lawyer and member of the Management Committee, Jukka
Naulapää, LL.M., was appointed the Group’s director, legal affairs, effective
February 8, 2006.

Capital expenditures

Capital expenditures during the report period totalled EUR 57.0 million (EUR
59.0
million).

The Department Store Division’s most important investment was the department
store that was opened in leased premises in the new extension to the Jumbo
Shopping Centre in Vantaa towards the end of October. The department store has
about 11 000 square metres of retail space and it has had good sales
performance.
Stockmann’s share of the total costs for the project came to about EUR 6
million.

The large-scale enlargement and transformation project for the department store
in the centre of Helsinki got started. The town plan change required for it was
approved by the Helsinki City Council in June. The project involves enlarging
the
department store’s commercial premises 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 a new customer car park. After the enlargement the Helsinki department
store will have a total of about 50 000 square metres of retail space. The total
cost estimate for the project is approximately EUR 125 million. It is estimated
that the works will be completed stage by stage by 2010.

New Stockmann Beauty stores were opened in Jyväskylä as well as at the Iso Omena
Shopping Centre and the Sello Shopping Centre in Espoo. Finland’s fourth Zara
store opened for business at the Jumbo Shopping Centre in Vantaa in October. In
early 2006, a Stockmann Beauty store will be opened in the Kamppi shopping mall
in Helsinki.

The first Bestseller stores operating on the franchising principle were opened
in
Russia in 2005: three stores in Moscow and one in St Petersburg. The flagship
Zara store in Russia was opened in the heart of Moscow in June and, in addition,
three other Zara stores were opened in Moscow. The number of Zara stores in
Moscow rose to seven by the end of 2005.

The Department Store Division’s capital expenditures came to EUR 47.3 million.

Stockmann Auto’s capital expenditures amounted to EUR 2.7 million, of which an
outlay of EUR 1.5 million was made on vehicles included in property, plant and
equipment. Stockmann Auto expanded its operations at its current site in Tampere
in October with the launch of a Ford dealership there in addition to the
previous
?koda dealership. In Espoo’s Niittykumpu district, ?koda was added as a new
marque along with Ford. An opportunity for expanding the range of marques
opened
up at these outlets when the location clause of the Block Exemption Decree
governing the motor trade at the EU level was abolished on October 1, 2005.

Hobby Hall’s capital expenditures amounted to EUR 1.3 million.

Seppälä’s capital expenditures came to EUR 3.4 million. It expanded its
operations to Lithuania and opened three stores there during 2005. Both in
Finland and in Latvia Seppälä opened two new stores. In Russia, a fourth store
was opened in Moscow, and operations were also extended to St Petersburg, where
two stores were opened.

Other capital expenditures in the report period amounted to EUR 2.3 million.

Current projects

In 2005 Stockmann signed an agreement on the purchase of a 10 000-odd square
metre commercial plot on Nevsky Prospect, St Petersburg’s high street. The plot
is located next to the Vosstaniya Square underground station, in the immediate
vicinity of the Moscow Station. Stockmann will erect on the plot a shopping
centre with about 50 000 square metres of gross floor space. According to plans,
this will be the site of a full-scale Stockmann department store with about 20
000 square metres of retail space, other retail stores, a hotel and an
underground car-park. The department store and shopping centre investment will
have a price tag of about EUR 80-110 million, depending on the final floor space
to be built. Plans call for opening the department store and shopping centre in
autumn 2008.

In early 2006, Stockmann signed an agreement with IKEA on leasing space in the
Mega Shopping Centre, which is to be built on Moscow’s southeast side. This will
be the site of the fourth full-scale Stockmann department store in Moscow, and
Seppälä and Bestseller stores will also be opened there. Plans call for starting
up operations around the turn of the year 2006-2007. Stockmann’s total capital
expenditure for the site will be about EUR 16 million.

Shares and shareholders

The company’s market capitalization increased by EUR 620.5 million during the
year and stood at EUR 1 761.3 million at the end of the year (EUR 1 140.8
million).

Stockmann’s shares outperformed both the OMX Helsinki Index (the former HEX
General Index) and the OMX Helsinki Cap Index (the former HEX Portfolio Index)
during the report period. At the end of the year the stock exchange price of the
Series A share was EUR 32.11, compared with EUR 21.10 at the end of 2004, and
the
Series B share was selling at EUR 32.53, as against EUR 21.70 at the end of
2004.

The Helsinki Stock Exchange decided on reducing the round lot for Stockmann
shares from 50 shares to 20 as from 1 July 2005.

The 4 900 Stockmann plc Series B shares with a par value of 2 euros which were
subscribed for in December 2004 with the share options for 2000 were entered in
the Trade Register on March 16, 2005, and they were admitted for public trading
on the Helsinki Stock Exchange together with existing shares on March 17, 2005.

The Year 2000 Stockmann share options were exercised to subscribe for a total
of
690 830 Stockmann plc Series B shares with a par value of 2 euros, of which 279
900 shares were subscribed for in the last quarter. As a consequence of the
subscriptions, the share capital was increased by a total of EUR 1 381 660. Of
the shares subscribed for in the fourth quarter, 90 450 shares were entered in
the Trade Register on November 18, 2005, and 189 450 shares were entered on
December 29, 2005. They were admitted to public trading on the Helsinki Stock
Exchange together with the old shares on November 21, 2005, and December 30,
2005.

At the end of December, the Year 2000 Stockmann share options were exercised to
subscribe for another 23 350 Stockmann Series B shares with a par value of 2
euros. As a consequence of the subscriptions the share capital was increased by
EUR 46 700 million. Stockmann’s Board of Directors approved the subscription in
its meeting held on 8 February 2005.

By exercising the A, B and C share options for 2000, which are quoted on the
Helsinki Stock Exchange, further subscriptions can be made for a total of 1 610
770 new Series B shares with a par value of 2 euros. The subscription price for
shares to be subscribed for by exercising the A options, after the dividend to
be
paid out for 2005, is EUR 12.85; the price through exercise of the B options is
EUR 13.85), and the price through exercise of the C options is EUR 14.85 per
share. The subscription period for shares to be subscribed for by exercising the
share options for 2000 ends on April 1, 2007.

A total of 343 902 Stockmann plc Series B shares with a par value of 2 euros
were
subscribed for with Stockmann Loyal Customer share options during the
subscription period from May 2, 2005, to May 31, 2005. The subscription rights
were exercised by 12 851 Stockmann Loyal Customers. As a consequence of the
subscriptions, the share capital was increased by EUR 687 804. The subscription
price was EUR 8.81 per share. The shares were entered in the Trade Register on
June 29, 2005. They were admitted to public trading on the Helsinki Stock
Exchange together with the old shares on June 30, 2005. A total of 950 835
Stockmann Series B shares have been subscribed for with Loyal Customer options
during 2001-2005. The subscription period ended on May 31, 2005.

Following the above-mentioned increases, the share capital is 108 966 084 euros
and the total number of Series B shares is 29 918 799.

Stockmann held 396 876 of its own Series B shares (treasury shares) at the end
of
2005, and they represented 0.7 per cent of all the shares outstanding and 0.1
per
cent of all the votes. The shares were bought back at a total price of EUR 6.0
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.

Board of Directors’ proposal for a share option programme for Loyal Customers
and
key employees, and proposal for an authorization to transfer treasury shares

The Board of Directors will propose to the Annual General Meeting that a total
maximum of 2.5 million share options be granted without consideration to
Stockmann’s Loyal Customers in disapplication of shareholders’ pre-emptive
subscription rights. The purpose of granting the share options is to offer Loyal
Customers a significant benefit that rewards them for patronage and at the same
time improves Stockmann’s competitive position.

Share options will be granted to Loyal Customers whose purchases during January
1, 2006 – December 31, 2007, together with purchases made on parallel cards for
the same account are at least EUR 6 000 in total amount. For purchases of at
least EUR 6 000, a Loyal Customer will receive 20 share options without
consideration. In addition, for each full 500 euros by which the purchases
exceed
EUR 6 000, the Loyal Customer will receive an additional two share options. Each
share option entitles its holder to subscribe for one of the company’s Series B
shares. It will be proposed that the subscription price per share be the volume-
weighted average price of the Series B share on the Helsinki Stock Exchange
during the period February 1 – February 28, 2006. The subscription price of a
share subscribed for with the share options will be lowered by the amount of the
dividends declared prior to the share subscription, on the record date for each
dividend payout. The subscription period for the shares is in May in the years
2008-2010. As a consequence of the subscriptions, the company’s share capital
can
be increased by a maximum of EUR 5.0 million.

The Board of Directors will propose to the Annual General Meeting that a share
option programme be targeted at key employees belonging to the senior and middle
management of Stockmann and its subsidiaries as part of the incentive and
commitment-building scheme for management. A total maximum of 1.5 million share
options will be granted and they will entitle their holders to subscribe for a
total maximum of 1.5 million of the company’s Series B shares. Of the share
options, 750 000 will be granted only if the criteria linked to the Group’s
financial targets as determined by the Board of Directors prior to the
distribution of these share options have been met. Otherwise they will lapse.
The
subscription prices of the shares to be subscribed for on the basis of the share
options will be the volume-weighted average price of the company’s share on the
Helsinki Stock Exchange during February 1 – February 28, 2006, plus 10 per cent,
and the volume-weighted average price of the company’s share on the Helsinki
Stock Exchange during February 1 – February 29, 2008, plus 10 per cent. The
subscription price of the shares to be subscribed for with share options will be
lowered, by the amount of dividends declared after the commencement of the
period
for determining the subscription price and prior to the share subscription, on
the record date for each dividend payout. The subscription period for the shares
to be subscribed for on the basis of the share options will be stepwise during
2008-2013. As a consequence of the subscriptions, the company’s share capital
can
be increased by a maximum of three million euros.

In addition, the Board of Directors will request the Annual General Meeting to
grant authorizations for a period of one year to decide on the transfer of the
company’s treasury shares.

Personnel strength
During the report period the Stockmann Group had an average payroll of 10 558
employees, or 967 more than in the comparison period. The growth in the number
of
employees was attributable mainly to the new speciality and department stores in
Moscow as well as to the new department store in the Jumbo Shopping Centre in
Vantaa. Converted to a full-time basis, the average number of personnel
increased
by 725 employees and was 8 537.

At the end of 2005, Stockmann had 3 737 employees working abroad. At the end of
the previous year Stockmann had 3 391 people working abroad. The proportion of
the total personnel who were working abroad was at the same level as in the
previous year or 32 per cent.

Risk factors

The level of business risk in the Stockmann Group’s areas of operations varies.
The level of business risk in the Baltic countries has diminished significantly
after these countries became members of the European Union, nor do the risks
differ in any material respect from business risks in Finland.

Business risks in Russia are higher than in Finland and the Baltic countries,
and
the operating environment is less stable owing to factors such as the business
culture and the undeveloped state of the country’s infrastructure. The
pervasiveness of the grey economy, particularly in the importation of consumer
goods, is still large and plays a part in distorting properly functioning
competition. Over the past years, the operating environment and legislation
pertaining to business activities have nevertheless improved rapidly. The
country’s economic growth has been robust thanks to the strong impetus from
export revenues in the energy sector. Stockmann has more than 16 years of
experience of operating in the Russian market, and during this time the Group
has
succeeded in carrying on its business in an operating environment that was
considerably worse than the present one. Accordingly, even large changes in the
operating environment in Russia are not estimated to result in a material
increase in the entire Stockmann Group’s business risk.

The Group’s revenue and earnings are affected by changes in foreign exchange
rates between the Group’s reporting currency, the euro, and the Russian rouble,
the United States dollar as well as certain other currencies.

Stockmann Auto divested

On January 19, 2006, Stockmann sold the entire shares outstanding in its
subsidiary Stockmann Auto Oy Ab to Veho Group Oy Ab, the Ford businesses in
Turku
and Espoo to SOK as well as Stockmann Auto’s VW-Audi business to Kesko
Corporation’s subsidiary Helsingin VV-Auto Oy for a total price of about EUR 70
million. The transaction is contingent on approval by the competition
authorities
and it is scheduled to enter into force on March 1, 2006. Stockmann will offer
its loyal customers Veho’s entire range of marques and has launched wide-ranging
loyal customer cooperation together with Veho.

Klaus Sundström, managing director of Stockmann Auto Oy Ab and a member of the
Stockmann Group’s Management Committee, will oversee implementation of the
company and business transactions of the vehicle business. After the
transactions
are completed, Mr. Sundström will take up special duties with Stockmann plc and
resign from the company’s employ six months after the transactions have been
finalized.

Stockmann sells its Zara franchise subsidiary in Russia

Stockmann sold its subsidiary that is engaged in the Zara business in Russia to
the brand’s owner, the Inditex company of Spain, and will focus on expanding its
own operations in Russia. In Finland, Stockmann will continue the Zara business.
In 2002 Stockmann and Inditex concluded an agreement on the basis of which
Stockmann received, up to 2010, franchising rights to trade under the Zara brand
in Russia. By the end of 2005, Stockmann opened in Russia seven Zara stores,
whose operations got off to a good start. Sales by Stockmann’s Zara stores in
Russia were about EUR 46 million in 2005. In step with the strong growth of the
economy, the Russian market has become ever more interesting as an operating
environment for retailers. Accordingly, Inditex and Stockmann decided by mutual
agreement to cancel their previous contractual arrangements and concentrate
henceforth on expanding their own business operations in Russia. As a
consequence
of the agreement that was made, operations in Russia have been carried out for
Inditex’s account as from January 1, 2006 and the final agreement, the coming
into force of which is contingent on approval by the Russian Anti-monopoly
Committee, will be made on May 31, 2006, at the latest. The purchase price was
about EUR 41.5 million. The capital gain will improve the Group’s earnings
substantially in 2006.

Outlook for 2006

Retail sales, excluding the motor trade, are estimated to increase by about 2-3
per cent in Finland in 2006. It is estimated that the markets in Russia and the
Baltic countries will continue growing faster than the Finnish market. Because
of
the divestment of the vehicle business and the Zara business in Russia, sales in
2006 will diminish, and they are estimated to come in at about EUR 1.6 billion.
Sales, excluding the divested businesses, are estimated to increase.

Operating profit of the Department Store Division and Hobby Hall is estimated to
improve further from the level achieved in 2005. Seppälä’s operating profit on
ordinary operations is estimated to remain at the level reported in 2005. The
capital gain on the sale of the vehicle business and the company that was
engaged
in the Zara business in Russia will improve the Group’s earnings significantly
in
2006. Stockmann’s target is for the Group to post markedly higher profit before
taxes in 2006 than it did in 2005.

Helsinki, February 8, 2006

STOCKMANN plc

CONSOLIDATED BALANCE SHEET 31.12.2005
31.12.2004
EUR mill. EUR
mill.
ASSETS
NON-CURRENT ASSETS
Intangible assets
Intangible rights 7.1 9.1
Goodwill 0.5 0.5
Intangible assets, total 7.6 9.6
Property, plant and equipment
Land and water 21.8 22.5
Buildings and constructions 145.6 143.3
Machinery and equipment 63.0 59.7
Modification and renovation expenses for leased premises 57.6 50.0
Advance payments and construction in progress 15.0 8.2
Property, plant and equipment, total 303.1 283.7
Available-for-sale investments 6.0 6.6
Non-current receivables, interest-bearing 4.3 8.5
Deferred tax assets 3.5 2.0
NON-CURRENT ASSETS, TOTAL 324.5 310.3
CURRENT ASSETS
Inventories 212.0 195.0
Current receivables
Receivables, interest-bearing 107.5 108.1
Receivables, non-interest-bearing 99.2 94.1
Income tax receivable 0.1
Available-for-sale investments 0.0
Current receivables, total 206.6 202.4
Cash and cash equivalents 18.4 41.4
CURRENT ASSETS, TOTAL 437.0 438.7
ASSETS, TOTAL 761.5 749.0

STOCKMANN GROUP
CONSOLIDATED BALANCE SHEET 31.12.2005
31.12.2004
EUR mill. EUR
mill.
EQUITY AND LIABILITIES
EQUITY
Share capital 109.0 106.8
Share premium fund 166.5 154.8
Other funds 44.1 44.6
Translation difference 0.0 -0.1
Retained earnings 185.7 161.9
Equity attributable to equity holders of the parent 505.3 467.8
Minority interest 0.0 0.0
EQUITY, TOTAL 505.3 467.9
NON-CURRENT LIABILITIES
Deferred taxes 28.2 29.2
Non-current liabilities, interest-bearing 13.7 15.3
NON-CURRENT LIABILITIES, TOTAL 41.9 44.5
CURRENT LIABILITIES
Current liabilities, interest-bearing
Repayments of long-term loans in one year 35.0
Current liabilities 33.6 17.7
Current liabilities, interest-bearing, total 33.6 52.7
Current liabilities, non-interest-bearing
Trade payables and other current liabilities 175.5 175.9
Income tax liability 5.2 8.0
Current liabilities, non-interest-bearing, total 180.7 183.8
CURRENT LIABILITIES, TOTAL 214.3 236.6
LIABILITIES, TOTAL 256.2 281.1
EQUITY AND LIABILITIES, TOTAL 761.5 749.0

STATEMENT OF CHANGES
IN EQUITY
Share Treasury
Share premium share Legal Other
EUR mill. capital fund fund reserve funds*
Equity December 31, 105.3 147.1 6.2 0.2 43.7
2003
Translation
differences
Deferred tax
liabilities/assets
Depreciation
Own shares -6.2
Financial instruments 0.3
Adjusted equity 105.3 147.1 0.0 0.2 44.1
January 1, 2004
Options exercised 1.6 7.9
Transfer to other -0.2
funds
Cash flow hedges -0.3
Financial instruments 0.6
Dividends
Translation
differences
Profit for the period
Equity December 31, 106.8 154.8 0.0 0.2 44.4
2004
Options exercised 2.1 11.7
Share bonus 0.1
Transfer to other 0.1
funds
Costs of share issue -0.1
Cash flow hedges -0.6
Financial instruments
Dividends
Translation
differences
Profit for the period
Equity December 31, 109.0 166.5 0.0 0.2 43.9
2005
*excluding deferred
tax liability

STATEMENT OF CHANGES
IN EQUITY
Share Treasury
Share premium share Legal Other
EUR mill. capital fund fund reserve funds*
Equity December 31, -0.1 244.7 547.1 0.0 547.1
2003
Translation 0.1 -0.1 -0.1 -0.1
differences
Deferred tax -7.5 -7.5 -7.5
liabilities/assets
Depreciation -10.8 -10.8 -10.8
Own shares -6.2 -6.2
Financial instruments -0.9 -0.6 -0.6
Adjusted equity 0.0 225.4 522.0 0.0 522.0
January 1, 2004
Options exercised 9.5 9.5
Transfer to other 0.2 0.0 0.0
funds
Cash flow hedges 0.2 -0.1 -0.1
Financial instruments 0.6 0.6
Dividends -123.3 -123.3 -123.3
Translation -0.1 -0.1 -0.1
differences
Profit for the period 59.3 59.3 0.0 59.3
Equity December 31, -0.1 161.9 467.9 0.0 467.9
2004
Options exercised 13.9 13.9
Share bonus 0.1 0.1
Transfer to other 0.2 0.3 0.3
funds
Costs of share issue -0.1 -0.1
Cash flow hedges -0.6 -0.6
Financial instruments 0.0 0.0
Dividends -53.0 -53.0 -53.0
Translation 0.2 -0.2 0.0 0.0
differences
Profit for the period 76.9 76.9 0.0 76.9
Equity December 31, 0.0 185.7 505.3 0.0 505.3
2005
*excluding deferred
tax liability

NET TURNOVER 1-12/2005 1-12/2004 change change
EUR mill. EUR mill. EUR mill. %
Department Store Division, 666.7 624.5 42.2 6.8
Finland
Department Store Division, 232.7 164.8 67.9 41.2
international operations
Department Store Division, 899.4 789.3 110.1 13.9
total
Stockmann Auto 338.3 358.0 -19.6 -5.5
Hobby Hall, Finland 145.8 148.6 -2.9 -1.9
Hobby Hall, international 28.9 29.3 -0.4 -1.4
operations
Hobby Hall, total 174.7 177.9 -3.3 -1.8
Seppälä, Finland 108.7 105.3 3.3 3.1
Seppälä, international 19.4 13.0 6.4 49.1
operations
Seppälä, total 128.1 118.4 9.7 8.2
Eliminations 2.1 1.5 0.6
Operations in Finland, total 1 261.5 1 237.9 23.6 1.9
International operations, 281.0 207.1 73.9 35.7
total
Total 1 542.6 1 445.0 97.5 6.7

INCOME STATEMENT
1-12/2005
1-12/2004
REVENUE 1 542.6 1
445.0
Other operating income 7.0 2.4
Raw material and consumables used, total 995.5 951.5
Wages, saleries and employee benefits expense 218.0 202.2
Depreciation and impairment losses 35.8 31.5
Other operating expenses 196.7 182.5
OPERATING PROFIT 103.7 79.8
Financial income and costs -0.9 -0.9
PROFIT BEFORE TAXES 102.8 79.0
Income taxes 26.0 19.6
PROFIT FOR THE PERIOD 76.9 59.3
Investments, gross 57.0 58.9
Share of revenue 3.7 4.1

Key figures
2005 2004
Equity ratio 66.4 62.5
Gearing 5.7 5.7
Cash flow from operations per share, EUR 1.5 1.62
Interest-bearing net debt, EUR mill. -83.3 -89.9
Number of shares at Sept. 30, 2005, thousands 54 483 53 420
Weighted average
Number of shares, thousands 53 350 52 544
Weighted average number of shares, diluted, thousands 54 129 53 509
Earnings per share, EUR 1.44 1.13
Earnings per share, diluted, EUR 1.42 1.11
Operating profit, per cent 6.7 5.5
Equity per share, EUR 9.34 8.83
Return on equity, per cent, moving 12 months 15.8 12.2
Return on capital employed, per cent, movin 12 months 19.6 14.8
Average number of employees, converted to full-time staff 8 537 7 812

Income statement, Group, EUR Q4 Q3 Q2 Q1
millions quarterly, EUR
millions
2005 2005 2005 2005
REVENUE 475.7 351.8 380.9 334.1
Other operating income 7.0 0.0 0.0 0.0
Raw material and consumables -290.2 -229.9 -247.3 -228.1
used, total
Wages, saleries and employee -64.8 -48.6 -53.6 -51.0
benefits expense
Depreciation and impairment -10.3 -8.9 -8.0 -8.5
losses
Other operating expenses -59.4 -45.0 -47.3 -45.0
OPERATING PROFIT 58.0 19.5 24.6 1.6
Financial income and costs -1.4 0.9 -0.5 0.1
PROFIT BEFORE TAXES 56.6 20.4 24.2 1.7
Income taxes -14.2 -5.0 -6.3 -0.5
PROFIT FOR THE PERIOD 42.4 15.4 17.9 1.2
Minority interest 0.0 0.0 0.0 0.0
PROFIT FOR THE PERIOD 42.4 15.4 17.9 1.2

SEGMENT INFORMATION
Segments
Sales, EUR millions 1-12.2005 1-12/2004
Department Store Division 1 070.6 938.8 14 938.8
Stockmann Auto 414.1 437.1 -5 437.1
Hobby Hall 210.5 214.4 -2 214.4
Seppälä 155.2 143.7 8 143.7
Eliminations + shared 0.9 0.9 0.9
Group 1 851.3 1 735.0 7 1 735.0
Revenue, EUR millions
Department Store Division 899.4 789.3 14 789.3
Stockmann Auto 338.3 358.0 -5 358.0
Hobby Hall 174.7 177.9 -2 177.9
Seppälä 128.1 118.4 8 118.4
Eliminations + shared 2.1 1.5 1.5
Group 1 542.6 1 445.0 7 1 445.0
Operating profit, EUR millions
Department Store Division 70.3 63.7 10 63.7
Stockmann Auto 3.1 7.0 -55 7.0
Hobby Hall 6.1 -2.9 -2.9
Seppälä 31.1 17.1 81 17.1
Eliminations -7.3 -1.7 -1.7
Shared 0.3 -3.5 -3.5
Group 103.7 79.8 30 79.8
Investments, gross, EUR
millions
Department Store Division 47.3 48.8 -3 48.8
Stockmann Auto 2.7 4.4 -38 4.4
Hobby Hall 1.3 1.2 9 1.2
Seppälä 3.4 1.2 176 1.2
Shared 2.3 3.3 -30 3.3
Group 57.0 59.0 -3 59.0
Assets, EUR millions 31/12/05 31/12/04 Change
31/12/04
per cent
Department Store Division 486.5 443.1 10 443.1
Stockmann Auto 98.2 113.1 -13 113.1
Hobby Hall 106.3 102.2 4 102.2
Seppälä 31.2 29.2 7 29.2
Shared 39.3 61.3 -36 61.3
Group 761.5 749.0 2 749.0
Non-interest-bearing 31/12/05 31/12/04 Change
31/12/04
liabilities, EUR millions per cent
Department Store Division 113.0 96.5 17 96.5
Stockmann Auto 36.9 45.1 -18 45.1
Hobby Hall 15.3 17.0 -10 17.0
Seppälä 10.9 10.4 5 10.4
Shared 32.9 44.1 -25 44.1
Group 209.0 213.1 -2 213.1
Market areas
Sales, EUR millions 1-12/2005 1-12/2004 Change
1-12/2004
per cent
Finland 1) 1 520.9 1 492.9 2 1 492.9
Baltic states 2) 140.8 119.5 18 119.5
Russia 3) 189.6 122.5 55 122.5
Group 1 851.3 1 735.0 7 1 735.0
Finland, per cent 82.2 86.0 86.0
International operations, per 17.8 14.0 14.0
cent
Revenue, EUR millions
Finland 1) 1 261.5 1 237.9 2 1 237.9
Baltic states 2) 119.7 102.0 17 102.0
Russia 3) 161.4 105.1 54 105.1
Group 1 542.6 1 445.0 7 1 445.0
Finland, per cent 81.8 85.7 85.7
International operations, per 18.2 14.3 14.3
cent
Operating profit, EUR millions
Finland 1) 95.4 76.9 24 76.9
Baltic states 2) 7.4 0.2 0.2
Russia 3) 1.0 2.7 2.7
Group 103.8 79.8 30 79.8
Investments, gross, million
euros
Finland 1) 34.6 22.3 55 22.3
Baltic states 2) 1.7 3.1 -46 3.1
Russia 3) 20.7 33.5 -38 33.5
Group 57.0 59.0 -3 59.0
Finland, per cent 60.7 37.8 37.8
International operations, per 39.3 62.2 62.2
cent
Assets, EUR millions 31/12/05 31/12/04 Change
31/12/04
per cent
Finland 1) 587.4 602.2 -2 602.2
Baltic states 2) 72.2 70.9 2 70.9
Russia 3) 101.9 75.9 34 75.9
Group 761.5 749.0 2 749.0
Finland, per cent 77.1 80.4 80.4
International operations, per 22.9 19.6 19.6
cent
1) Department Store Divisions,
Stockmann Auto, Hobby Hall and
Seppälä
2) Department Store Divisions,
Stockmann Auto, Hobby Hall and
Seppälä
3) Department Store Divisions
and Seppälä

CONTINGENT LIABILITIES
EUR millions 2005 2004
Security pledged on behalf of the company
Mortgages given 1.7 1.7
Securities pledged 0.1 0.2
Total 1.7 1.9
Lease payments
Within one year 1.7 3.0
Within 1-5 years 0.6 0.8
Total 2.3 3.9
Other liabilities of the company
Repuchased liabilities for transferred lease and 13.3 20.6
hire-purchase agreements
Total 13.3 20.6
Liabilities, total
Mortgages 1.7 1.7
Pledges 0.1 0.2
Other liabilities 15.5 24.4
Total 17.3 26.3
Minimum payments on the basis of binding lease agreements
on commercial premises
EUR mill 2005 2004
Within one year 62.8 59.3
Within 1-5 years 189.2 201.6
In five years more 146.8 195.9
Total 398.8 456.8
NOMINAL VALUES OF DERIVATIVE CONTRACTS
EUR millions 2005 2004
Nominal values
Currency forwards !9 10.4 86.9
Interest rate swaps 0.0 35.0
Total 10.4 121.9
1) The nominal value at December 31, 2005, of currency
forward contracts taken out to hedge future cash flows was
EUR 0.0 million (December 21, 2004: EUR 68.5 million)

CONSOLITATED CASH FLOW STATEMENT
STOCKMANN GROUP
2005 2004
EUR mill. EUR
mill.
CASH FLOW FROM OPERATING ACTIVITIES
Net profit for the financial year 76.9 59.3
Adjustments
Depreciation 35.8 31.5
Other operating income -7.0
Interest paid and other financial expenses 3.7 4.4
Interest received -2.8 -3.6
Taxes paid 28.2 25.2
Changes in working capital
Change in trade and other receivables -2.6 -5.5
Changes in inventories -17.1 -3.7
Change in trade payables and other liabilities 0.9 5.9
Interest paid -3.9 -4.3
Interest received 1.2 1.1
Taxes paid 31.3 23.9
NET CASH FROM OPERATING ACTIVITIES 81.9 88.3
CASH FLOWS FROM INVESTING ACTIVITIES
Investments in property, plant and equipment -58.1 -57.1
Proceeds from sale of property, plant and equipment 11.7 0.5
Capital expenditures on other investments 0.0 0.0
Cash from other investments 1.5 1.2
Dividens received 0.2 0.6
NET CASH FROM INVESTING ACTIVITIES -44.7 -54.7
CASH FLOWS FROM FINANCING ACTIVITIES
Change in loans granted, increase (-), decrease (+) 0.0 0.0
Proceeds from issue of share capital 13.9 9.5
Change in short-term loans, increase (-), decrease (+) 15.8
Repayments of long-term borrowings -36.6 0.0
Dividens paid -53.3 -123.0
NET CASH USED IN FINANCING ACTIVITIES -60.2 -113.5
Change in cash flows -23.0 -79.9
Cash and cash equivalents at beginning of period 41.4 121.3
Cash and cash equivalents at end of period 18.4 41.4

AVERAGE NUMBER OF EMPLOYEES 2001 2002 2003 2004 2005
CONVERTED TO FULL-TIME STAFF
Department Store Division 4 263 4 459 4 782 5 601 6 401
Stockmann Auto 790 741 776 740 690
Hobby Hall 688 755 704 608 537
Seppälä 749 705 709 759 809
Management and administration 91 92 97 104 100
Total 6 581 6 752 7 068 7 812 8 537

STOCKMANN plc

Hannu Penttilä
CEO

SUPPLEMENT
Notice of Annual General Meeting

DISTRIBUTION
Helsinki Stock Exchange
Principal media

A press and analyst conference will be held today, February 8, 2006, at 14.00 at
the World Trade Center, Aleksanterinkatu 17, Helsinki.

SUPPLEMENT

NOTICE OF ANNUAL GENERAL MEETING

Notice is hereby given to the shareholders of Stockmann plc that the Company’s
Annual General Meeing of Shareholders will be held on Tuesday, 21 March 2006,
beginning at 4.00 p.m. at the Finlandia Hall at the address Karamzininkatu 4,
Helsinki. In addition to an advance registration, shareholders must register at
the meeting venue as of 2.30 p.m. Registration for the meeting is requested to
be
made no later than 3.45 p.m. Free parking will be provided for attendees in the
parking lot of the Finlandia Hall.

The following items are on the agenda:

1.
The matters belonging to the competence of the Annual General Meeting under
Article 14 of the Articles of Association

2.
The proposal by the Board of Directors to issue option rights to the Loyal
Customers of Stockmann

The Board of Directors proposes to the Annual General Meeting of Shareholders to
issue without payment, in deviation from the shareholders’ pre-emption right to
subscription, to the loyal customers (holding loyal customer card) of Stockmann
a
maximum of 2,500,000 option rights. It is proposed to deviate from the
shareholders’ pre-emption right to subscription because the option rights are
intended to be issued in order to offer loyal customers a benefit that rewards
the purchase loyalty of the loyal customers while simultaneously strengthening
the competitive position of Stockmann. Options will be issued to loyal
customers,
whose purchases together with purchases originating from parallel cards directed
to the same account during the time period 1 January 2006 – 31 December 2007
amounts to a total of at least EUR 6,000. For purchases of at least EUR 6,000,
the loyal customers shall without payment receive 20 options. In addition, for
every full EUR 500, with which the purchases exceed EUR 6,000, the loyal
customer
shall receive an addition of 2 options. Each option right entitles its holder to
subscribe for one share of the Company’s Series B shares. The subscription price
for the shares shall be the trading-volume weighted average price for the
Company’s Series B shares on the Helsinki Exchanges during the time period of 1
February – 28 February 2006. The subscription price for a share subscribed for
based on the option rights shall at each record date of the dividend
distribution
be decreased with the amount of possible dividends decided upon after 21 March
2006 and before the share subscription. The subscription periods for the shares
shall be 2 May 2008 – 31 May 2008, 2 May 2009 – 31 May 2009 and 2 May 2010 – 31
May 2010. The share capital of the Company may increase by a maximum of EUR
5,000,000 as a result of the subscriptions.

3.
The proposal by the Board of Directors to issue option rights to key persons of
the Stockmann Group

The Board of Directors proposes to the Annual General Meeting of Shareholders to
issue, in deviation from the shareholders’ pre-emption right to subscription, to
key persons of the management or middle management of Stockmann and its
subsidiaries and to fully owned subsidiaries of Stockmann a total of 1,500,000
option rights. It is proposed to deviate from the shareholders’ pre-emption
right
to subscription because the option rights are part of the incentive and
commitment scheme of the group and constitutes an important element in
preserving
the Company’s competitive advantage on the international recruitment markets.

Of the option rights, a total of 375,000 shall be marked with the symbol 2006A,
a
total of 375,000 with the symbol 2006B, a total of 375,000 with the symbol
2006C,
and a total of 375,000 with the symbol 2006D. The subscription period for shares
shall with the option rights 2006A be 1 March 2008 – 31 March 2010, with the
option rights 2006B 1 March 2009 – 31 March 2011, with the option rights 2006C 1
March 2010 – 31 March 2012 and with the option rights 2006D 1 March 2011 – 31
March 2013. The subscription period for the option rights 2006B and 2006D shall,
however, not commence if the criteria tied to the economical targets of the
group
and established by the Board of Directors prior to the distribution of the
option
rights have not been fulfilled. The option rights 2006B and 2006D for which the
criteria established by the Board of Directors have not been fulfilled, will
expire as determined by the Board of Directors. Each option right entitles its
holder to subscribe for one share of the Stockmann plc’s Series B shares, which
means that as a result of the subscriptions based on the option rights a maximum
of 1,500,000 shares may be subscribed for. The subscription price for shares
based on the option rights 2006A and 2006B shall be the trading-volume weighted
average price for the Company’s Series B shares on the Helsinki Exchanges during
the time period 1 February – 28 February 2006 increased with 10 percent and for
shares subscribed for based on the option rights 2006C and 2006D the trading-
volume weighted average price for the Company’s Series B shares on the Helsinki
Exchanges during the time period 1 February – 29 February 2008 increased with 10
percent. The subscription price for a share subscribed for based on the option
rights shall be decreased with the amount of possible dividends decided upon
after the commencement of the determination period for the subscription price
and
before the share subscription at each record date of the dividend distribution.
The share capital of the Company may increase by a maximum of EUR 3,000,000 as a
result of the subscriptions.

4.
Proposal for the authorization of the Board of Directors to decide on the
conveyance of the Company’s own shares

The Board of Directors proposes that the Annual General Meeting of Shareholders
authorizes the Board of Directors to decide on the conveyance of a maximum of
396,876 of the Company’s own Series B shares. The authorization includes the
right to decided on the conveyance of shares in one or several lots in deviation
of the shareholders’ pre-emption right. The shares can be conveyed as
compensation in possible business acquisitions or other structural arrangements,
to be used as part of the Company’s incentive and bonus scheme, to be used for
the payment of the share compensation of the Board of Directors or to be sold
through public trading. The shares shall be conveyed to the prevailing market
value of the public trading. The authorization shall be in force for one year
after the Annual General Meeting deciding upon the granting of the
authorization.

Financial statement documents and proposals by the Board of Directors

The financial statement documents and the above-mentioned proposals by the Board
of Directors are available for inspection by the shareholders as of 13 March
2006
at the Company’s Head Office, Aleksanterinkatu 52 B, 8th floor, Helsinki
(Christina Harjunpää). Copies of the documents will be sent to shareholders upon
request.

Participation in the Annual General Meeting

Entitled to participate in the Annual General Meeting of Shareholders are each
shareholder, who on Friday 10 March 2006 is entered as a shareholder in the
shareholder register kept by the Finnish Central Securities Depository Ltd and
who has registered for the meeting no later than on Wednesday, 15 March 2006.

Also a shareholder whose shares have not been transferred to the book-entry
system has the right to participate in the Annual General Meeting of
Shareholders
provided that the shareholder has been registered in the Company’s share
register
prior to 28 September 1994. In this case the shareholder must present at the
Annual General Meeting his share certificates or other documentation indicating
that the title to the shares has not been transferred to the book-entry system.

A shareholder wishing to participate in the Annual General Meeting of
Shareholders must notify the Company of his intention to participate no later
than on Wednesday 15 March 2006, by 4.00 p.m. by telephone on the number +358 9
121 4020 or via the Company’s internet pages www.stockmann.fi.
If a participant at the meeting represents a shareholder by proxy, we kindly
request that proxy forms for a designated person be delivered to the Company no
later than by 17 March 2006 at the address Stockmann plc, Heini Köpsi, P.O. Box
147, FI-00381 Helsinki.

Payment of dividend

The Board of Directors proposes to the Annual General Meeting of Shareholders
that a dividend of EUR 1.10 per share be distributed for the financial year
2005.
It is proposed that the dividend for the financial year 2005 be paid on 31 March
2006 to the shareholders entered as shareholders in the shareholder register
kept
by the Finnish Central Securities Depository Ltd. on the record date for
dividend
payment 24 March 2006.

To the shareholders who have not transferred their share certificates to the
book-
entry system by the record date, the dividend will be paid after a transfer of
the shares to the book-entry system.

Composition of the Board of Directors

The Appointments and Compensation Committee of the Board of Directors proposes
to
the Annual General Meeting of Shareholders that seven members be elected as
members of the Board of Directors and that the present members of the Board of
Directors, Lasse Koivu, Managing Director, Erkki Etola, Managing Director,
Professor Eva Liljeblom, Kari Niemistö, Managing Director, Minister Christoffer
Taxell, Carola Teir-Lehtinen, Senior Vice President, Corporate Communications
and
kammarrådet Henry Wiklund having given their consent, be re-elected, for a
period
of office continuing until the end of the next Annual General Meeting.

Auditors

The Board of Directors proposes that as auditors for the year 2006 be elected
Wilhelm Holmberg, CPA and Henrik Holmbom, CPA in accordance with their consents.
As deputy auditor is proposed to be elected KPMG Oy Ab, an auditing entity
authorized by the Central Chamber of Commerce.

Helsinki, 8 February 2006

The Board of Directors