Good morning. Good morning everybody here in the Helsinki flagship and good morning to everybody online through the webcast or the Internet. I hope everybody had a good summer, and it's time to kick off the important autumn semester also with Stockmann and the Q2 or half-year financial report. Overall, a solid quarter for the group. The adjusted operating result, where we have already taken out the capital gain for the Book House, landed at EUR 9.3 million, and it comes basically all from Lindex.
Elisabeth will go through the Lindex figures in detail, particularly happy that the comparable sales in the current situation went up by 4.5%, gross margin went up by 3.1%, EUR 8.3 million EBIT improvement. The group gross margin also was better, but it came particularly from Lindex. On the other side, we did not reach our goals in retail.
Maiju will share actions there, but we will and have been strongly focusing on the digitalization and digital projects and we will come out with those, that information in more detail latest Q4 this year. Real Estate continued its solid performance. No major surprises you could say.
We have opened quite a few new tenants in the Helsinki flagship and also in other locations. Nevsky, we are actively working on the divestment, and I emphasize the word actively. Pushing it forward. Overall, a solid quarter, and this clearly proves that we have done the right things for Lindex, and the tough decisions made related to the collections and the cost savings have been correct. The first signs of Lindex turnaround are there.
Revenue was down by 0.6%, up in Lindex and Real Estate, but in Retail we do have to pick up the work with the turnover and that's why the new projects and actions have been going forward quickly. There was a small impact on the Swedish crown rate on the revenue in Lindex.
Gross margin was up, particularly happy I am also what we said end of last year that we start to see the improvements with the collections at the end of first quarter, during the second quarter, and we actually kept this promise. The collections have worked very well in Lindex. The margin went down because we did have higher markdowns in the summer clearance sales.
Overall, we became landed positive, and of course this gives good signs that the things we have done are the correct ones. EBITDA up to EUR 37.7 from EUR 29.5. Depreciation a little bit lower than last year, the profit EUR 23.8 compared to EUR 14.6, the difference of EUR 9.3 comes there.
The rolling 12 months adjusted operating profit is there. The Lindex improvement is clearly visible here on the second compared to last year's figures. After tough two pillars, you could say, the direction is up again. Key figures are here. Perhaps to bring up the inventories, slight, a bit below last year.
I want to perhaps point out that the fact that the DC has really started to work even more efficiently than earlier. The goods flow through in a day and a half, also the e-commerce deliveries, we now send roughly 70% of the e-commerce orders within 24 hours.
This is of course a solid sign that the DC, after teething problems as always, the new projects has really started to work well. We actually had our board meeting yesterday in the DC, and also to emphasize to our board that it's a vital artery for the operations in retail. CapEx roughly on the same level as last year.
The divestment of the Book House is visible in the debt development. It declined from first quarter by roughly EUR 178.5 million. You remember that it's very cyclic in retail and of course this is one factor here, but nevertheless, a good development also on that respect for the debt that we have. For the market environment.
The GDP development in Finland and Sweden will, or we expect that it will continue and the purchasing behavior, especially due to the digitalization and the increasing competition, will play a role. The fashion market went down in Finland by around 1% and in Sweden 2%.
Also from that perspective, the Lindex performance of 4.5 is clearly above the market trend. No major changes in the Baltics. The tough decisions we have made in both retail and Lindex on the cost efficiency will be fully visible in next year. They are already visible, but they will be further visible. As an example, we have challenged the landlords, especially in Lindex, more than ever with excellent results by Elisabeth and her team and this will continue. If we don't get the rental level we ask for and if the store is not profitable, we close.
We keep the guidance as before, it remains unchanged. The group's revenue is expected to be on par with the previous year, and the adjusted operating profit is expected to improve in 2018. Elisabeth.
Yes. Thank you.
I'll take my water or my lemonade on this. Oh, you have it all here.
Let's start with the highlights from the quarter. The main highlight from my point of view is the increase in traffic, the interest from our customers, and the increased number of customers, and also combined with increased receipts.
The changes that we have done in our customer offer comes both from assortment changes but also marketing activities, and that has been very well received by our customers. We can see a very strong improvement in our online business, and that is a very good sign for the future.
As Lauri mentioned, our profitability program has been focusing both on assortment but also on the cost side and the efficiency actions that we have made in our head office and on our indirect cost as well as the rental agreements is going to show a positive result, and we will reach our promised targets.
We are constantly challenging our network together with our landlords to evaluate each and every location, and that has been a strong focus during this quarter. We also launched a new communication concept and a new kids' store concept during this quarter. What I didn't mention but Lauri said is the nice effect that all our actions have had on the gross margin, mainly coming from decreases in markdown levels. The figures then.
I'd rather talk about comparable store development since we have the exchange rate challenges going from SEK to EUR. The gross margin is up above three units, and the operating costs are down even though we are including some of the costs that we will have for closing the some of our stores. The adjusted operating result is then up for the quarter, going from EUR 12.6 to EUR 19.6 in reported operating profit.
The store network then. We are challenging all our locations, and we are launching new store concepts. We are opening stores, and we are closing stores. Altogether, this will mean that we will have slightly less number of stores when we will reach the end of this year. Yes, the way forward.
The changes that we have done within the assortment focusing on wearability, the balance in the assortment coming from evaluating the share of fashion items and the share of basic items and also the work that we have done with optimizing quantities and variants in store, that will continue, of course. We will launch interesting collections also for the autumn to come.
We are working with implementing the launch of our customer sales program that we call Customer First in all our stores, in all our markets. That will be a big focus going forward. Of course, we will continue to increase our focus both on activities but also in investments when it comes to the e-commerce. We see great potential in improving that channel.
Going forward, the efficiency program that will help our profitability will then be fully taken into the P&L, you can say, with a run rate from October going forward 12 months. That period we will have the full effect from all the actions that we have decided upon and started during this year. Susanne will take over from now from last week, so you will meet her in the coming quarterly reports here. Thank you.
Yes. Hi. The quarter for Stockmann Retail next. You probably remember that we started the quarter with a successful campaign with the Crazy Days. We had huge growth, almost 20% in online, and still were able to keep the sales level in the Finnish brick-and-mortar stores. Baltics had a very successful campaign.
For the online store, the whole quarter was really good increases there. Baltics also, they did a very good quarter again, once again. We can see that we had increase in sales both in delicatessen in Baltics and then on the non-food side of the department store. Like Lauri said, it's been two years since we opened the new distribution center, and it's working really well now. The stock management is in very good shape.
We had smaller summer sale than we had year before. Also right now the stores look really ready for the fall. We have good level of novelties in the stores, and once the weather turns colder, we are ready to help the customers to update their own style and their home for the fall season. We are constantly bringing new reasons for the customers to visit Stockmann. We opened in May in Helsinki flagship the one of the three information points for the city of Helsinki. It's located on the street level in this building. We also done a partnership with National Opera, so it's an exclusive partnership with them.
The tickets for National Opera are now sold in their channels online and offline, and then at Stockmann. That, that goes for all the Finnish department stores, so they are available throughout the whole chain. We are having a pop-up of Svenskt Tenn in this building, and it has been hugely successful, really something that the customers were waiting for to arrive in Finland and you can now only find it here. We hope to continue with them also after September.
We continue to bring in new brands all the time to mention a few, here is a list of some of the brands that we have brought in, a couple of highly anticipated cosmetics brands like Jo Malone, Champion in sportswear, a brand that is trending high like many of the old school sportswear brands are doing. Deha, that's a different kind of sportswear brand, a more feminine soft brand coming from Italy. The last one on the list, I think needs no presenting.
We have reorganized our sales teams in the Finnish department stores or are in the middle of doing it. We are ready in all the other stores, and we are finalizing the work in this building during this month and the next one. We have been listening to our customers.
We know that they want to have a easy and convenient payment, and on the other hand, they want to have fully dedicated professional service from our salespeople. We are responding to this need by reorganizing the team so that we free our salespeople to move around the store. They are able to help the customers throughout the different departments move from one floor to another to offer the full full service to offer anything the customers want between all the different brands that we have in the department store.
At the same time, as offline and online are becoming one retail, and we are constantly bringing in new omni services, the work at the cash register becomes more complicated, and we are able to bring or build competencies in that part by having a separate team to take care of the payment. That requires centralizing the cash register areas.
That is being done now in this building also. That doesn't mean it means cash register areas are being centralized, not smaller amount of cashiers. Online really strong this quarter and Baltics, we had more challenges in brick and mortar in Finland. That now then shows on the revenue that you see here. Minus 4% to previous year.
We did increase the discount percentage for summer sale during June, that helps or helped us then so that we didn't have the need to move into higher percentage like we did last year, minus 80% in the beginning of quarter three. The operating result in comparable comparison down from previous year. If we looked at the situation with delicatessen like it was the year before, it looks a lot better. Our strong focus and investment on digital is bringing results.
As I said, the online store had a very good quarter. There are a couple of points that the customers want from us. They want large assortment online and we have taken good improvements here.
We have 56%, almost 60% more selection buyable nowadays than we had the year before. We have a strong plan and target to take a big leap forward with this still during this year. Another important thing for the customer are the delivery times. We have widened the network that we have for the pickups for the customers.
It's click and collect in the stores, and then we have a huge network of pickups also outside our own locations. As Lauri mentioned, we are really quick now at the DC with the sending the deliveries, and this is also one thing that shows how well we can now work with the distribution center and serve all channels once everything is coming from the same central DC.
Reserve and collect service, we have seen that is something that the customers want for, from us, and it has really become a, an crucial point for the customers. Nowadays 95% of this building's assortment can be reserved online, and you can see the figure from a year before. It's a big improvement there also.
To be more agile on the, on the digital development, we are reorganizing the teams, as you can see here, and bringing in new resources also into going forward with the digital. We are swiftly moving towards a seamless premium shopping experience. Thank you. Real estate and Björn.
Thank you. The real estate in Q2 continued quite stable performance. We had increase in the revenue and operating profit. One of the highlights was the divestment of the book house on the other side of the street here in Helsinki. Quite successful process that was done in four and a half months. Perhaps that tells a bit about the difference in the property market within the European Union compared to the property market on the other side of the eastern border, where the process has been substantially longer when it comes to the Nevsky process. As Lauri said, is in a very active stage at the moment.
When it comes to the food experience concept that we have been working a lot with, we have during the quarter seen some finalized projects with new openings in both this building, the flagship and in other department stores with new partners within the food experience. We still believe very much in this concept and will continue to develop it further. Also as has been published earlier, Elena Stenholm will take up as the director for the real estate division and the real estate business within Stockmann later on this autumn.
My relation to Stockmann will from Saturday onwards be a very loyal customer. I will continue my professional tasks in the real estate industry outside the company from Monday onwards. As waiting for Elena Stenholm to join, Seppo Oksanen will be in charge of the business. Seppo has been in the real estate division since 2015, responsible for our leasing operations in all markets. When it comes to the KPIs for the real estate business during Q2, we had growth in both revenue and operating result, also in the adjusted operating result.
The net operating income is on par with Q2 last year, mainly due to the fact that the book house was out of our balance sheet by the 24th of May this year, whereas it during 2017 was in our figures during, and in our ownership during the Q2. These are the main happenings during this quarter in the real estate business. Here you see the last slide with the balance sheet, the properties on our balance sheet at the moment after the divestment of the Book House and the Stockmann usage of gross leasable area in each and every property in our ownership. I think we move then to questions and answers.
Thanks, Björn. Okay, here is the presentation by the management. We are ready to take questions now.
Hey, I'm Pirkko Tammilehto from Kauppalehti. What are the main actions you will do so that will keep the revenue up in this department stores? You were disappointed on the level right now.
Yeah. Shall Maiju reply or shall I reply? Maybe Maiju can reply.
Yes. So combining the two channels, online and offline, is the main thing for us. The total sales is the thing that is important for us and also for the customers to have the full Stockmann experience regardless of the channel. We are improving the assortment. We are bringing everything viable regardless of the channel or viable digitally.
The customer service is definitely a thing that our customers value, and actually all the department store businesses really rely on. Customer service, the premium, in the customer service and all the services that we offer. We are now bringing more into center the all the different kind of services that we have in the department stores like beauty advisors or personal shoppers or fashion advisors that are something that differentiate us from, for example, the shopping centers.
Maybe Pirkko to add that, Stockmann has always had a, at least in the some of the segments, that you can always get everything from Stockmann. Stockmann "You can get anything" as the '80s slogan was when we were advertising or '70s. We would like to get some of that gloria back, also utilizing the digital channels to, as Maiju and I mentioned earlier to double the SKU amounts and also through partnerships.
It's a percentage of your, of your revenue when you compare to the digital channels. How big is the percentage?
You mean what is the share of e-com?
Share, yes. E-commerce, yeah.
Yeah, it's still in both Lindex and in retail, less than 10%.
Do you have any target for that?
Yes, we would like to have visibly more than 10%, obviously. It is growing very quickly now, and, but the amounts, the levels have been rather low, so it takes a bit of time to see. Once it get on the correct level, and we really see significant growth figures, especially in Lindex for e-commerce, and significant it means tens of percent every month.
One last question about the tourists. Are more tourists now in this summer? We had a very beautiful summer here.
Yeah.
What about the Russians and the Chinese? What is the, well, the meaning of those?
For the tourists, tax-free, due to the expensive ruble, has not been on the same level as last year. There are visibly less Russians, but significantly more tourists from the Asian countries and China. The ruble rate is immediately visible in the tax-free sales for the Russians, particularly in this building. It's purely because of the ruble.
Niclas Catani from OP. You mentioned on the Lindex side that you have been successful in negotiating the rents down. However, in the retail side, you say that the rents have gone up. Could you a little bit elaborate the dynamics there and what is the outlook? Because I think they also should be going the other way.
Yes, I know. Björn has not been nice to Maiju, and he has increased rents. That's the main reason. We have been acting according to the lease agreement, and the rents have gone up. That's the reason.
Can I just, one follow-up? How about the external, real estate that you rent?
Yeah.
How it has been developing over there?
There has not been increases. Now I have to remember, there was one the Tapiola. Tapiola rent is higher than before, but all the others are more or less the same. Internal, all the internal locations and then our own properties and then Tapiola as an external, the rents are up.
Petri Kujala from SEB. About retail, do you still think it's achievable for retail to be sort of like EBIT neutral for the full year?
It was already stated in my CEO comments that this year we will not reach that target.
Okay. Thank you.
We need a bit more time. When we set the target in 2016, we believed that this would be doable. We had a good running rate for. We have improved the EBIT now by in two years comparable EUR 30 million, but we need a bit more time to achieve it. EUR 30 million has already been, you could say, caught up with retail, but we still have a bit of a way to go.
Could you give a bit more color on the St. Petersburg divestment process? Do you have a plan B for the coming debt repayment in January should the St. Petersburg divestment not go as planned?
Yeah. We are fully focusing on divesting the Nevsky Centre. There was, for example, two days ago, there was in the Russian media that one of the buyers may have taken out. I mean, we don't comment any... We are, as I said, we are in very active stage at the moment to divest the Nevsky, this is all I can state now about the process. Very active stage at the moment. Okay. If no more questions, I want to thank everybody here in Helsinki for coming here on this beautiful nearly autumn morning, I also want to thank everybody online for joining the half year result with us. Thank you, have a good day.