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Stockmann to sell its Russian department stores to Reviva Holdings

Published 02 December 2015

Finnish retailer Stockmann Group has signed an agreement to sell its Russian department stores for EUR5m ($5.3m) to Reviva Holdings.

Stockmann

Under the deal, Reviva will completely acquire AO Stockmann, the Russian subsidiary of Stockmann plc, in a cash transaction.

Reviva Holdings is the owner of Debruss, the Russian franchisee of Debenhams retail chain. Reviva will now be the new owner of seven of the department stores. The transaction is expected to be completed on 31 January 2016.

Reviva will assume control of the operations of all current department stores in the seven locations starting February 2016. The company will have a right to use Stockmann brand in Russia for two years from the closing date of the transaction. Reviva plans the transition of Stockmann branded stores to Debenhams during this two-year period.

The completion of the deal is subject to approval from Russian Federal Antimonopoly Service and Reviva's lease guarantee arrangements.

The sale is intended to help Stockmann to focus on its real estate venture in Russia and on the Nevsky Shopping Centre in St. Petersburg.

Stockmann CEO Per Thelin said: "Our Russian department store business has been unprofitable for the past several years and the significant devaluation of the rouble has deepened our losses. Stockmann is targeting a turnaround in its profitability, and therefore we have decided to withdraw from the entire Russian department store business. The planned transaction offers continuity both for our Russian customers and personnel, which is very important to us.

"While pulling out from the department store business in Russia, Stockmann will continue as a real estate owner of the Nevsky Centre which has a prime retail location and a strong tenant mix in St Petersburg. We are happy to have the Debenhams brand as a long-term anchor tenant for our shopping centre. At the same time, we can put a stronger focus on developing the department store and online business in Finland and in the Baltic countries as well as the Lindex business across the markets."

The acquired seven department stores include five in the Moscow region, one in St Petersburg and one in Ekaterinburg, an outlet store, a logistics centre and administration and support functions, which are primarily located in Moscow.

Following the acquisition process, AO Stockmann's 2,300 employees will be transferred to Reviva. Stockmann Spb Centre LLC, the subsidiary that owns the Stockmann's shopping centre in St Petersburg, will continue to function under Stockmann.


Image: Stockmann to sell its Russian department stores.Photo: Courtesy of Jonik/Wikipedia.