releases

Eastern European Markets

NEWS RELEASE
May, the 11th 2009

Hobby Hall to withdraw from Baltic countries

Hobby Hall, the distance retailing company that is part of the Stockmann Group, will discontinue its business in the Baltic countries by autumn 2009 and focus on the development of its operations in Finland. Discontinuation of the unprofitable Baltic business is part of the ongoing measures to improve Hobby Hall's financial performance. At the beginning of 2010, Hobby Hall will be integrated as part of Stockmann's Department Store Division, which will later commence its own distance retailing operations in line with Stockmann's multichannel strategy for the department stores.

Hobby Hall has operated in Estonia since 1992, in Latvia since 2000 and in Lithuania since 2002. Last year Hobby Hall's combined sales in the three Baltic countries amounted to EUR 33 million, which was close to one fifth of Hobby Hall's 2008 sales total of EUR 191 million. Hobby Hall has engaged in both conventional catalogue sales and online sales in all of the Baltic countries, and the company has also had a store in Tallinn.

Hobby Hall's operations in the Baltic countries have failed to achieve a sufficient level of profitability throughout the present decade. Quick escalation of the financial crisis in the Baltic countries has brought a substantial deterioration in purchasing power, leading to loss-making operations, and there are no foreseeable opportunities in the next few years to improve the profitability of the business.

Receipt of customer orders in the Baltic countries will end on 5 July 2009, and the operations will be shut down in stages by 31 August 2009. Owing to the discontinuation, the employment of all personnel in the Baltic countries will be terminated. Currently Hobby Hall has 63 employees in Estonia and 19 in Latvia. As a result of shutting down the Baltic operations, Hobby Hall will commence co-determination talks in Finland on making cuts amounting to 42 man-years in marketing, purchasing and logistics.

The non-recurring expenses from the closure of operations will not significantly exceed the operating loss that would arise if the operations were continued until the end of 2009.

Early this year, Stockmann made the decision to integrate Hobby Hall into Stockmann's Department Store Division as from the beginning of 2010. Hobby Hall will continue as an independent division during 2009, its objective being to improve its profitability and prepare for the integration process.

For further infomation
Hobby Hall's managing director,
Raija-Leena Söderholm, tel. +358 500 410625,
e-mail raija-leena.soderholm@stockmann.com

www.stockmann.fi


Compiler´s choice - More News Releases

Archive 2005. News Releases