Finnish retail giant Stockmann to sell Seppala fashion chain

Finnish retail group Stockmann has decided to sell its loss-making fashion chain Seppala in a management buyout, said the group in a press release published on Monday.

Stockmann said it has signed a letter of intent to sell Seppala to the subsidiary company's CEO Eveliina Melentjeff and her husband.

The deal, which includes 82 Seppala stores in Finland and 20 in Estonia, is expected to be concluded by the beginning of April this year. The purchase price has not been disclosed yet.

Currently, Seppala has 130 stores in Finland, 36 in the Baltic countries and 16 in Russia.

According to Stockmann's reconstruction plans announced at the beginning of October last year, all the Seppala shops in Russia and nearly half of the shops in the Baltic countries will be closed by the end of 2015.

In addition, Seppala's operations in Finland will be considerably downsized and the number of stores will be reduced from 130 to 82.

The sale will ensure the continuation of Seppala, which has operated for over 80 years, said Melentjeff, who was appointed as Seppala's CEO in December 2013.

After the reconstruction plan is completed, Stockmann said, it will focus on its operations on Stockmann Departments, another fashion chain Lindex and Real Estate, while gradually giving up other businesses.

Founded in 1862, Stockmann is a Finnish listed company engaged in the retail trade, with 16 department stores and over 700 stores in 16 countries around the world. Its department store in downtown Helsinki is the biggest in the Nordic region.

Suffering from the stagnation of the Finnish economy and the recession in Russia, Stockmann's profits continued to decline in recent couple of years.

According to its annual report, Stockmann Group's preliminary revenue decreased by 11.6 percent in 2014, compared to the previous year. Seppala's revenue, in particular, dropped significantly by 24.1 percent. Endit