Translation: Original comment published in Finnish on 5/15/2023 at 4:30 am.

Stockmann announced on Friday morning that Susanne Ehnbåge, CEO of Lindex , has been appointed CEO of Stockmann Group as of May 12 and that the current CEO Jari Latvanen leaves the company. We believe that this change makes Lindex clearly the main business of Stockmann, which it has been in monetary terms for a long time. Lindex has also improved its performance strongly with Ehnbåge at the helm so her track record is strong. The change also opens the door for speculation about the future structure of the Group. We consider the news positive in principle.

COVID and restructuring marked Latvanen's period

Jari Latvanen started as Stockmann's CEO in August 2019. In practice, we feel he has been the head of the Stockmann division, i.e. the department stores, whereas Lindex has operated very independently. After the COVID pandemic started, Stockmann applied for corporate restructuring in April 2020 where it still is. When Latvanen started, and also partly during the restructuring, Stockmann was, in our opinion, strongly controlled by the then Chairman of the Board, Lauri Ratia. On the other hand, during the restructuring, the role of the liquidator Jyrki Tähtinen was important. The restructuring program was approved in the court in February 2021 and is largely binding on Stockmann's operations until the restructuring is completed. Therefore, we feel that Stockmann's performance in recent years, in good or bad, cannot be put on Latvanen as he has not really had any possibilities to introduce policies in the company during the restructuring. The Stockmann division's earnings have, however, despite the rent cuts enabled by the restructuring, been clearly in the red.

Ehnbåge has a strong track record from Lindex, the Group's situation becomes more natural

Susanne Ehnbåge started at Lindex in 2018, when Lindex had a very weak 2017 behind it. Even though Ehnbåge’s era has also been clouded by many effects from COVID, Lindex is currently generating more than twice the EBIT as in 2018-19. Based on this, Ehnbåge’s track record from Lindex is strong. We do not, however, believe that she has a miracle cure for the difficult situation in department stores.

With Ehnbåge’s appointment, the CEO and CFO of Stockmann Group is also the CEO and CFO of Lindex. Considering that Lindex generates the result for the entire Group and thus also forms all its value, we believe that this arrangement is more natural than the previous one, where the Group CEO formally was the boss of Lindex’s CEO. In connection with Ehnbåge’s appointment, Stockmann appointed Management Team member Tove Westermarck as Chief Operating Officer of the Stockmann division.

The appointment can accelerate speculations about possible structural arrangements in department stores

The Chairman of Stockmann's Board of Directors changed less than a couple of months ago at the General Meeting and the company postponed its CMD planned for March as its strategy work is still ongoing. Ehnbåge’s appointment can be seen as part of this process and at least the new Board of Directors quite quickly decided to change the CEO of the Group. As Stockmann's management is now also Lindex’s management, structural arrangements directed at the department stores can seem a bit more likely. On the other hand, we point out that the main owner, Nordic Retail Partners (joint venture between Konstsamfundet and JC Switzerland), has emphasized long-term development of both divisions.