Good morning, everybody, and welcome to our Q1 2020 Interim Statement. Today, we are presenting this statement in a different manner. Online, we have from Gothenburg, Susanne Ehnbåge, CEO for Lindex. Our Chairman of the Board, Lauri Ratia, is also joining through the Webex, and he will join at the end of the presentation. Here physically in Helsinki, I have also the CFO, Pekka Vähähyyppä, and I will start the report from here. As the COVID-19 affected the performance dramatically, Stockmann Group's strategic measures developed as planned in the beginning of 2020. The group sales in February were on a healthy level with a 3.5% growth. After the first week of March, the coronavirus situation changed everything. The decline in customer volumes and sales was massive. Sales declined by close to 50% in March.
Timing of the coronavirus was extremely unfortunate for Stockmann's very important campaign, Crazy Days, and the campaign was forced to be held only on online. Despite the strong growth of 82% online, the sales could not compensate the drastic decline in the department stores. In March, Stockmann launched cost savings measures and initiated code termination negotiations with our personnel. In Finland, the department stores operations adjusted personal resources with the temporary layoffs, and Lindex initiated measures to cut cost and to adjust its personal resources in the different operating countries. Stockmann PLC decided to file for corporate restructuring proceedings on 6th of April 2020. After the first week of March, the coronavirus epidemic in Europe caused significant changes in Stockmann Group's operating environment. Strong sales growth in Stockmann and Lindex online stores could not compensate the drastic decline in customer volumes and in the current exceptional situation.
The company's business remains viable and can be restored to a sound basis, the board of directors and Stockmann decided, taking into consideration the company's financial structure, to file for restructuring proceedings for Stockmann PLC. Lindex and Stockmann's department stores in Tallinn and Riga are not in the scope of restructuring proceedings. Stockmann PLC's decision to file for restructuring was supported by debtors presenting more than half of the debts. The District Court of Helsinki ruled a temporary prohibition and collection for Stockmann PLC on 6th of April. Attorney Jyrki Tähtinen from Borenius Attorneys Ltd. was appointed as an administrator. The District Court of Helsinki ruled to initiate proceedings on the 8th of April. Creditors' committee was nominated on the 21st of April, and a proposal for the restructuring program must be drawn up before by 11th of December 2020.
If we look our results in Q1, the revenue was roughly EUR 170 million, and the decline was 17.6% comparable currencies. Adjusted operating result was -EUR 29.4 million, and comparable -EUR 20.6 million, or -EUR 21.8 million, if we exclude Nevsky Center. We had a good development in January and February. Coronavirus affected the sales heavily in March. Lindex revenue was close to EUR 100 million, down by 13.2%. Growth on the online stores was 36.6%. Gross margin improved in Lindex, and operating cost were down by EUR 2.7 million. Adjusted operating results declined by EUR 4.2 million. In Stockmann's side, the revenue was close to EUR 70 million, down by close to 26%.
The growth on the online stores was 73.5%, during the campaign of Crazy Days, the online store growth was 82%. On the Stockmann side, operating costs were down by EUR 8.2 million, and adjusted operating results declined by EUR 6 million. We look closer to Stockmann division, revenue, as said, was close to EUR 70 million, and was down by 25.7%. The sales in January, February was on the previous year's levels, and the sales decline in March was 53% due to the coronavirus situation. The growth on the online store was 73.5%, and the share of online sales was 12.4% of for the quarter compared with last year, 5.3%. We can clearly see in Stockmann, the online sales has been growing rapidly.
Gross margin was 44%. It declined mainly due to the coronavirus situation, which affected the rental income from the tenants. Operating costs, as said before, was down by 82%, and this is thanks to a very rapid and good cooperation, measuring our personal cost and our support function cost. This led to an operating result of a minus EUR 13.3 million versus last year minus EUR 8.1 million. Operations adapted to the current epidemic. For example, Crazy Days, we executed online campaign to ensure safety, no makeup services, and increased attention and measures to improve hygiene in department stores. We had a product offering in web store to cope lack of customers in department stores due to the government restrictions.
Restaurants and cafés were closed in the department stores, Co-termination negotiations initiated in March on temporary layoffs together with our employees was done with a very good cooperation by our employees. Some highlights before the COVID-19. We launched an atelier area in the Finnish design in Helsinki department store. In February, a versatile selection of accessories were added to Con.stru Stockmann brand for men, We launched a premium area for designer bags, That was opened in the department store in the end of February, We added several top brands, for example, Marc Jacobs, Kenzo, Karl Lagerfeld, and so on. This is a proof that we are, and we keep implementing the strategy as stated before.
In March, we also opened new services for our customers, like sales service, teleselling, gift services, drive-in lines, the customers can order products by phone or get them delivered home or a recipient the same day. Now I would like to hand over to Susanne.
Thank you. Thank you, Jari. If we then continue, Lindex financial performance for the first quarter of 2020 is of course affected by the current situation with corona, where we have been forced to close our stores in 13 out of 18 markets. I will talk more about the corona effects and actions shortly. If we just take a look, first look at the first quarter, Lindex revenue was EUR 99.4 million, which is a decrease of 13.2%. The decrease mainly comes from loss of sales in brick-and-mortar. During the quarter, we had a positive development of our online sales with a growth of 36.6%. The total share of online sales was 9.2% compared with the previous year's 5.8%.
Gross margin increased to 61.4%, and the operating costs decreased by EUR 2.7 million. The gross margin increased mainly due to high start margins, and the cost savings actions was implemented due to the corona situation. The adjusted operating profit was -EUR 15.2 million, which shows a decrease compared to 2019. If we compare our results two years back, the operating result is actually stronger than 2018, despite the corona situation and closed stores. Corona affect sales from the second week of March, and until then, we had a strong start to the quarter where January and February shows increased sales in all business areas and in all countries compared to both previous year and budgets. The total sales in January and in February was 5.7%.
In March, the corona effect was significant, and the sales declined by 43.6%. The decrease mainly came from brick-and-mortar, where we from mid-March, in line with governmental decision, had to close 92 of 460 stores, as well as reducing opening hours. Despite the sale, in decrease in March, we had a positive and accelerated development on the online sales. Lindex online sales increased by 32% during the first two weeks in March, and performed even stronger during the second part of the month, with a sales growth of 156%. The increased online sales shows a result of the quick actions we had to make to meet the changed customer demands during the corona pandemic.
We have worked intensively and acted fast to implement a major program of action to meet the corona effects in the best possible way in order to minimize the consequences. We have shifted our focus even more to support the growing online sales, which, for example, means converting brick-and-mortar customers to become e-com customers as well as to increase our e-com warehouse capacity to meet current demands. We have adapted our order situation, which means that we have canceled, postponed, and fine-tuned orders. We are also counter sourcing to mitigate the risk of shortage and delays due to the lockdowns in production. We started immediate cost saving programs from mid-March, where all non-critical costs and investments were reprioritized, canceled, or postponed. We have also negotiated our supplier agreements and initiated rent negotiations with landlords in all of our markets.
Of course, another important part of our cost-saving program is reduced personnel costs, and this involves all markets, both stores and offices. We are continuously investigating and evaluating country-specific government programs in order to act according to the local recommendations and supports in all of our markets. We can concur that our actions as well have been well-received, and that our online sales continues to grow, which makes us convinced about continuing our focus and strategic investment in the digital development. Some of our highlights for the first quarter. Of course, a strong digital focus throughout the quarter, which was even more accelerated due to corona. We had also an extremely well-received underwear campaign and successful launch of our baby home collection. We initiated our partnership with Zalando and also launched our baby assortment on Tmall in China.
Both these two are important steps in our continued global and digital growth, which is part of our focus areas. Honoring for our franchising, where we're awarded the global prize for best emerging franchise in 2020. Also by the end of March, we had 460 stores in 18 countries, of which 39 was franchise stores. This meant that we opened one store in Latvia, and that we also closed four stores. Five stores during the first three months. Due to corona, as I said in the beginning, only five countries had stores open by the end of March, but this is looking more promising right now at this moment. To summarize it, we had a strong start of the quarter, which meant increased sales and results.
Our business, as many others, were affected by corona. My ambition is very clear. We shall be the company handling this situation in the best possible way as we go fast and being flexible. This means increasing the online sales even more, as well as adapting our cost level in order to get the best possible rebound after corona. Thank you. Now I will leave the word to Pekka. Thanks.
Thank you, Susanne . Good morning on my behalf as well, I will go through the group figures shortly. Just to change the slide. The page is not moving. Thank you. This is called teamwork. When we look at our revenue, it declined 17.6%, and that is nearly EUR 40 million. Despite of the decline, our gross margin, group level, grew, and it was 54.2%. Our operating costs went down nearly EUR 11 million, the operating result, like Jari said, at the group level was negative EUR 30.5 million, EUR 9 million below the previous year.
The net result after financing costs and taxes and everything, was -EUR 37 million. I want to highlight here that despite of the negative result, all our financial covenant criteria were met at the end of March. When we look at our interest during net debt, it declined, it has declined over the years and also end of this quarter, it was below previous year's similar quarter.
What you can see also from the picture is that we have a sizable volatility in our net debt, and that is very much related to the Crazy Days campaign, which Jari also explained. Looking at the key figures, starting from the bottom, our balance sheet, total amount of assets and liabilities we had in our operations end of this quarter was nearly EUR 2.1 billion. There is a decline of nearly EUR 100 million versus the previous year's similar quarter. That is explained partly by the weaker Swedish crown versus euro, and partly that due to the fact that our right-of-use liabilities were smaller than the year before.
When looking at the inventories, that was EUR 171 million end of this quarter, and that is higher than the previous year's similar quarter. That is natural and understandable because the decline in our revenue. We were not able to sell the merchandise as planned, and therefore the stock value is somewhat above previous years. Our net financial items were lower than previous year, EUR 2.4 million, and that is explained by the fact that during first quarter last year, we paid back some interest-bearing debt. To conclude, we have a very strong balance sheet.
Our equity ratio, including IFRS 16, is 35.8%, and excluding the lease liabilities through IFRS 16, the equity ratio is 47.8%. Moving on to outlook and guidance. March 18th, we said that we will provide new guidance when the visibility in the market is clearer. At this point, we are repeating the same message. The uncertainties in the market prevail. We will come back with new guidance when the market and the visibility is clearer.
However, at this point, I want to mention that we are working on a proposal for the corporate restructuring program, which need to be presented to the District Court of Helsinki before 11th of December this year. With these words, I would like to give floor to our Chairman of the Board, Lauri Ratia. Lauri, welcome.
Thank you. Thank you very much. I would like to give a short recap of the Stockmann's transformation process. We think we are on the right track. The strategic choices made in the spring 2019 have proven to be correct. The group's business operations in Stockmann and Lindex have developed as planned 2019, and even continued in January and February, like Jari commented. Like Pekka said, at the end of the March, all financing covenants were fulfilled. However, corona epidemic has caused steep declines in our customer volumes that have affected Stockmann Group's business environment deeply. We expect the customer volumes to recover only gradually.
In the view of the both board of directors and the management, is that the Stockmann division's business remains viable and can be restored to a sound basis, like Jari also said in his presentation. Our primary goal, of course, is to safeguard the sustainability of Stockmann division's business, jobs of our employees, and continue developing the group's healthy business operations for the future. We will focus on our target to be the number one source of inspiration in fashion, home, and beauty in Finland and Baltics in our department store operations. The development of Lindex continues, with a target of becoming one of the leading fashion houses in Europe. The process concerning strategic alternatives for the ownership of Lindex is, however, put on hold. With these brief statements, we are ready to entertain questions from the audience. Thank you very much.
Thank you, Lauri. Now we are ready for the Q&A.
Okay. Jari Salonen is asking, will the new online platform for stockmann.com still come, and when? Will it be possible to order from all department stores using the new platform?
Thank you. As we stated in October 2019, we were clear that our online business platform needs urgent improvements. That work was kicked off in October. Our original plan was to launch in the beginning of June, the new platform. Because of the corona
Impact. The development team was forced to leave Finland, we have figured out a way how we can work and continue with the work. Our aim is still to launch the first new version of the Stockmann online web store this summer. We are working towards to launch as soon as possible. The question was also, is it possible to then order from all department stores? Yes, this will be an omni-channel tool, basically our brick-and-mortar stores and the online are in the same channel and serving our customers the best possible way, both in brick-and-mortar and online. Our sales personnel will be trained to use the online tool in every store.
Rauli Juva asking, can you give any comments related to sales development in April, and how fast or well the cost cuts and reduced sourcing will impact?
Well, like Susanne explained, both Lindex and Stockmann took drastic measures in order to adjust our operating cost to a level with the turnover. We are following every day. The first two weeks of April have been similar to March. Now towards the end of April, we clearly see that in Lindex side, certain countries have opened or released the restrictions, like Norway, where the government is allowing stores to be open and customers to be moving on. We are still in a situation that in Estonia, the department stores are closed. Only the food court is open. In Riga, only during the weekdays the department stores can be open, but weekends they are closed.
In Finland, the last two weeks have been more busy and more customers on the move than the beginning of April. More I cannot say.
Another one from Rauli Juva. Do you believe that the current cash at hand is adequate liquidity for Q2 or do you need some additional financing?
Pekka, would you like to reply to this?
Yes, at this point, we have a good dialogue with the banks and we, if, there is a need for liquidity, excess need for liquidity here, I'm confident that we are able to arrange that liquidity. At this point, we have no immediate need for excess liquidity.
Anni Lassila, Helsingin Sanomat . This year the spring school festivities are not organized. What is the impact on the business?
Well, it's difficult to guesstimate. Now as we heard yesterday, the schools will be opened, but festivities are not allowed. As we speak, we can see that those who are graduating from the lukio, gymnasium, they are buying their caps. Guidelines for the festivities are not really clear for the students as we speak. What we can do is to adjust and serve our customers the best way in these times.
Pirkko Tammilehto, Kauppalehti, you mentioned in the report that you're considering sale of Stockmann's property. Could you tell more, a bit more about it?
Would you like to say?
Yes. As a part of the restructuring program which we are preparing for, we are revisiting everything which can be done. The possible sale of real estate is one part of that. At this point we say that we are evaluating that. At this point we cannot say anything else. In order for us to pay the debt which we have as an outcome of the restructuring progress, we need to revisit that asset as well.
I would like to add on that we consider this restructuring as a possibility for us to see new opportunities. This means that we will turn every stone once more to make sure we have a sustainable, profitable future for the Stockmann division.
Two questions from Jutta Rahikainen, SEB. The first one: Will you complete the Helsinki flagship renovation ongoing in the women fashion area despite the corporate restructuring?
Yes, we are currently doing it. As we stated, we started right after the Crazy Days, even though this year it was only online. Currently we're refurnishing the women's department in Helsinki.
The second one: Have you seen a pickup in department store customer flows already, or is it too early to say the worst is behind in sales drop?
As I said, it has been, we have seen more customers, visitors, the past two weeks, but I still would say it's too early to adjust or say how and what are the real impacts. It's interesting to see now as the schools will open how the customers start moving around and what kind of impact it is. We are following this every day, and every hour.
Panu Laitinmäki, Danske Bank, can you please elaborate on the possibility of a sale and leaseback solution for the company's real estate assets? Are there ongoing discussions with interested buyers? What is the assessed fair value of the properties?
There are not discussions ongoing. We, as Pekka stated before, we are now working on different alternative scenarios and building different kind of scenarios how we will build the Stockmann division's future on a sustainable, long-term profitable curve. This is part of it, but too early to comment on it.
Jutta Rahikainen, SEB, aside from a weak fashion market, are you seeing any product categories in your department store that are doing well? Home categories, for example.
Sorry, can you...
Yes. Aside from a weak fashion market, are you seeing any product categories in your department stores that are doing well? For example, home.
Yes. We can see home and cosmetics, or beauty has managed better, during the coronavirus times. People stay at home, so they also furnishing, they investing at home. Yes, we can clearly see that the home category has been performing better. There are also different areas where in fashion we see, more normal behaviors.
Jari Salonen, one more question. Will some department stores be closed in the restructuring?
As we said, we are working on different scenarios. Every stone will be turned. It's too early to comment.
Anni Lassila, Helsingin Sanomat, about insecurities among vendors. What does it mean in practice? Has somebody stopped delivering product after the situation, have you been forced to change contract details?
Basically, it is very unfortunate, the situation from the supplier's point of view. We've been communicating constantly already before the filing with our suppliers about the impact of corona. I think it's important to remember that corona impact is not only here in Finland and Stockmann, it is a global phenomenon. It is a virus that is impacting everybody. We both in Lindex side, we've been discussing when China was closed, Bangladesh opens now, India is still closed. Obviously we have a constant dialogue going on with our suppliers. How do we supply when the factories are closed? What kind of impact it has for the portfolio and assortment? When it comes to the restructuring side for Stockmann plc, obviously, again, we have a constant dialogue with our suppliers.
How can we together build and manage this unfortunate situation from the supplier's point of view? As our attorney Jyrki Tähtinen stated our supplier meeting that when this restructuring program. Everything that we buy after the filing is a normal behavior. We are buying and paying as we are doing every day. There are still discussions going on, but I would like to highlight, it's not only about the restructuring, it is also about the supply of goods, and that varies from supplier to supplier.
Tony asked us to please elaborate more on possible actions in restructuring.
Well, as I said, restructuring, you don't get into the program if the District Court doesn't see and believe that this is viable way for the company. I would like to repeat once more, our job is to secure the iconic company, secure the jobs for our employees, and we do business as normal. Our stores and web stores are open, though brick-and-mortar we have more limited hours, currently because of the coronavirus, but we operating normally. Now when we need to do the restructuring program, it is rewriting our strategy. It is going through every part of the strategy. How do we see?
How do we make sure, we, first of all, continue on the right track, as we have stated before, but also are there new opportunities where we can use the restructuring phase or program to reposition and to make Stockmann even stronger? We are still in the early days, so it's too early to comment what are the different impacts for going forward.
Jutta Rahikainen, SEB, how are the talks with your landlords? Will you get lower rental expenses near term?
This is part of the same program. We're obviously turning every stone. We have a dialogue with our landlords. We are constantly having dialogues with landlords, suppliers, and everybody related to Stockmann division.
Panu Laitinmäki,Danske Bank, do senior secured lenders continue to receive coupon payments during the restructuring process?
As part of the restructuring, all debt were frozen. Regarding the future payment of senior interest payments of the senior lenders, we are discussing that while we speak with the administrator and the lenders.
That was all. Thank you.
All right.
One more.
Oh, sorry. One more question.
Pirkko Tammilehto, Kauppalehti. What is happening in Jumbo Department Store right now? Do you already know how will it look like after renovation?
Again, I state the same. We are negotiating with our landlords, and work is ongoing.
Okay. Thank you.
This was the last questions. With this, we would like to thank you for participating our webinar. Thank you, Susanne, thank you, Lauri, and thank you, Pekka. Stay safe and come shopping. The store is open.