Good afternoon and welcome to the webcast for Stockmann Q2 results for the year 2016. My name is Lauri Veijalainen and I'm the Interim CEO of Stockmann. We will proceed the following way. I will give a short update on the highlights of the quarter and how we have proceeded with the strategic actions during this quarter. After this, I will shortly go through the group's financial performance in the period, as well as key figures and events for Stockmann Retail, Real Estate and Lindex. After this, we'll have some time for questions and answers. Let's proceed. Overall, the Q2 for Stockmann was rather a good one. It was also the 5th quarter when the group's operating result improved.
The star of the quarter was obviously Lindex, which did its all-time best Q2 for revenue and result, nearly EUR 10 million. The group gross margin improved from 52.7%- 54.5% and the operating result of the group improved from -4.1%- 11.1%. We have to remember though that there are certain timing issues, primarily the Crazy Days campaign that influences this. Overall, we are happy with the performance of the Q2 . We are also working and focusing fully on the offering and the key focus areas are fashion, beauty, home and food. I'm also happy to inform that we have more new, interesting and attractive tenants coming to our buildings.
As an example, the first Joe & The Juice bar in Finland will open before the year end in the Helsinki flagship. We have now basically completed the non-core business withdrawals. Only the execution of the Hobby Hall already signed transaction will be completed January 1, 2017. The outlook for 2016 remains unchanged. We still expect the adjusted operating result to be slightly positive. There are strong actions to improve both sales growth and cost efficiency that I will also share with you a bit later. We are really focusing on the growth through the key product areas. In the picture on page 4, you can see the new women's accessories area which has been opened recently in the Helsinki flagship.
This is a good example of the modern inspiring shopping environment we are consistently bringing to our properties. The target is really to differentiate from the competition. There will be new premium brands in our selection, some which have not been earlier seen in Finland. We also have brought in seasonal pop-ups. At the moment in the flagship, we have three very strong brands, Balmuir, Lumi and Marimekko, which are all local. Then Real Estate is hard working on the tenant and brand mix through the tenants, of which Longchamp is a good example and omnichannel being an integral part of the work. We have been paying strong focus on the cost efficiency and costs.
Obviously, the target is to reach the positive EBIT for the department store business at the end of 2018. The EUR 50 million efficiency program was announced earlier to be completed by 2016 and we are very well on our way of reaching the target. We announced a new additional plan to reduce additional EUR 20 million in our operations and organization through new leaner, mainly support functions. This was announced today that we will be reducing the headcount around 300 people in Finland and this is primarily in the support functions. We are not decreasing the number of the salespeople on the shop floor.
Thirdly, the new distribution center is up and running, which will give us annual cost savings of around EUR 5.5 million or EUR 3.5 million including depreciation in full in 2- 3 years time. However, in 2016 or this year, we have some overlapping rental and other costs which influence the profit and loss. The main task has been during the summer the leaner structure and organization, as well as securing our top line. We did certain actions already in June when the management teams of Stockmann Group and Stockmann Retail were combined. We have nominated several new directors and the target has been reached now to flatten the organizational structure and really simplify the processes to operate through a lean organization. Our cost structure has not been in balance with our top-line development.
As said earlier, roughly 300 positions will be reduced, most of them through layoffs. Additionally, we will be offering for around 80 people in the support functions a new position as a sales assistant. The goal is annually to enable cost savings of approximately EUR 20 million and this will be visible already in 2017. As said earlier, the Q2 was a good one. The revenue remained more or less flat. But in continuing product areas and businesses, it was up by 6.8%. The campaign of Crazy Days obviously impacted the figures. Lindex influenced also positively the other countries due to its positive growth. Gross margin improved as well and operating costs were down.
Depreciation was down due to the principle of Nevsky Center being handled as an investment property and therefore not depreciating. The operating profit landed at EUR 11.1 million positive from minus EUR 4.1 million a year ago. We also have to remember that we took into the books a provision of EUR 5.8 million for the organizational restructuring which was reflected in Q2. Without it, the operating profit would have been close to EUR 17 million. If we look at the key figures, I would like to point out the equity ratio which landed after six months at 46%. We have been working and continuing to work closely with the inventories which have been reduced and become more efficient.
CapEx or investments have been very, very strongly in the focus and here we have we landed at EUR 19.5 million compared to EUR 26.2 million a year ago. We have also streamlined the investment so that the estimate for 2016 investments has been reduced from EUR 60 million-65 million to EUR 40 million-45 million. Finland is continues to be a challenging market. The low cost of consumer purchasing power remains to be rather weak. However, we do see more stable development in Sweden and Norway and also the Baltic countries, Estonia and Latvia. There is obviously increasing competition in all the markets. In Russia, the recent developments may have an impact on the ruble development and through that also impacting possibly our operations in Real Estate in Nevsky Center.
However, we estimate that the adjusted operating result is to be slightly positive in 2016, hence our guidance remains unchanged. Once more to repeat the reduction in the CapEx from EUR 60-65 million down to EUR 40-45 million and really prioritizing the investments that we must do to move forward. Let's have a few words about retail. Retail remains our main challenge. We still have a rather lengthy way to go, but I'm satisfied that the direction is the right one. We must accelerate the speed even further and the additional EUR 20 million program and also the other measures earlier mentioned are important steps towards that goal.
We are working very hard on securing the sales development, which has not been satisfactory in these recent periods. We are improving the selection in key product areas. The fit-outs are completed or being completed. The Helsinki flagship has been under heavy works and those will be completed by October Crazy Days. As mentioned earlier, the new premium brands and seasonal pop-up shops will have or will be introduced. We are also working on the new stockmann.com platform. That will be launched on the second half of 2016. The refurbishment of store premises, we have the Tapiola store opening in March 2017. The food section in Turku, as well as the fifth floor in Tallinn, are all well on their way.
For Q2, for retail, the revenue was more or less flat from a year ago, but on continuing product areas and businesses during the timing, it was up by 10.8%. Therefore, the comparability is a bit difficult between the quarters. Gross margin also remained flat, but if we exclude the effect of the Crazy Days campaign, the gross margin was up. Operating costs were at EUR 84.3 million compared to EUR 85.7 million, but here I want to bring up again the reservation for EUR 5.8 million, which is included to the EUR 84.3 million. However, the operating result was still at minus EUR 20.5 million compared to EUR 21.8 million for the quarter and this is not satisfactory development and this is our main focus also going forward with the department store business.
In Real Estate, on slide 14 you can see some of the names and brands and tenants that we have recently opened in our premises. Some of them may not be familiar for our foreign investors and analysts and people who listen to this, but Isku Vallila is a decoration shop and then there is also UMA Esplanadi, a co-working place introduced as well as Smörgås Gastro Bar and Longchamp accessory shop in the Helsinki flagship shop. We are also opening several new shops and continuously working on the tenant and brand mix to bring the most exciting combo and tenant mix to our buildings wherever we are. Below are listed also some other shops and services which will be coming gradually to our buildings beside pure retail operators.
For Real Estate for quarter two, the fair value of the properties landed at EUR 909.5 million. The occupancy rate was lower slightly than a year ago, primarily due to the ongoing works in Tallinn for the fifth floor, which is completely being redone. For the gross leasable area at the moment, 53% is used by Stockmann retail and the difference is the transaction we executed last year when we sold the Russian department store business, including Nevsky Center, to the new owner. The net operating income from Stockmann-owned premises was down slightly. Partly decline was partly due to the timing of operating of certain costs.
Revenue landed at EUR 14.7 million from EUR 15.2 million a year ago and we this is primarily due to the temporary rent adjustments in Nevsky Center related to RUB rates used there. Operating profit landed more or less on par at EUR 5.4 million compared to EUR 5.5 million a year ago. Real Estate is going forward more or less like a train delivering solid reliable results quarter after quarter. We continue in developing the properties and bringing in new and more exciting tenants to our buildings. Thirdly, you could say without doubt the star of the group at the moment, Lindex.
Q2 was its all-time high, both for the revenue and result for the brand. The operating profit was up nearly EUR 10 million, landing at EUR 9.5 million. Obviously, this is based on successful collections and campaigns and the sales development was especially good in the Nordic countries. There is also greater clarity and visibility in Women's wear concept and collections. Its size range was a good decision. There is also great progress in sustainability. The value, the amount of the sustainable garments has increased by 64%. 42% of the garments are now made of sustainable materials. Lindex international expansion is visible on slide 18. The store network is, at the end of June, at 479 stores in 17 countries, of which roughly 40 are franchising stores.
Two stores were opened in Q2. Six stores were closed in Q2. All the stores in Russia are now closed. Lindex has left the Russian market. Figure-wise, Lindex for Q2, revenue was up little bit less than 1%. At comparable exchange rates, it was up 3.4% or 4.3% in comparable stores. As said, this was the best ever Q2 for Lindex. Gross margin also improved. The increase came from lower markdowns and also timing of a season sale. Lindex management has also been working very hard on the structure of the stock.
Lindex has been working also around its cost and decreasing its cost for quite some time and this good work has been visible earlier, but already and also for this quarter, where the operating cost was down by EUR 4.5 million. It's mainly coming from lower store and office costs, but also from the closure of the remaining operations in Russia. Operating profit thus was up by a astonishing EUR 9.5 million, the best ever for Lindex. Of course, we are also looking for the future with Lindex. There are strong autumn campaigns to come. The Women's wear Fall Fashion Heroes own design collection in October and Holly & Whyte for kids wear.
Of course, school openings are or have just started in Finland as well as in the Nordic countries, so that is also one key campaign that Lindex is focusing its operations heavily on going forward for the Q3 that we are now going on with. This was all for this time. I think that, I'm ready now to go to your questions. Please.
Thank you. If you would like to ask a question at this time, please press star one on your telephone. That's star one to ask a question. We will now take our first question from Cédric Lecasble from Kepler Cheuvreux. Please go ahead. Your line is open.
Yeah. Hi. Thanks, guys. Just a quick one on the operational cost in the department stores, which were down EUR 1.4 million in contrast to almost EUR 10 million in the Q1 . Just wondering, is this only related to the fact that the facilities came in April this year, or is there another explanation for it as well?
As I said, we have the reservation of EUR 5.8 million, which is distracting the cost structure. If you take the EUR 5.8 million out, the operating cost would have decreased significantly more. The EUR 5.8 million, which we had to take on the reorganization, deviates a little bit the full picture.
Cool. Thanks.
As a reminder, if you would like to ask a question, please press star one on your telephone. There are currently no more questions in the queue. I will turn the call back to your host.
In that case, it's Friday and the weekend is ahead. It's been a long day here in Helsinki and a tough day as well for us because of the co-determination talks and the reductions we had to take a decision on. I really want to thank everyone for your questions and participation and I will now close the webcast for today. Thank you very much for your participation and as said, have a very good weekend. Thank you.