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Yes, I tried to be a smart arse. Obviously it is a question of Stockmann Oyj (plc) speculation, a lots of things are happening around it. The latest AGM (Annual General Meeting) triggered a new phase.

Stockmann is an old department store in Finland, age almost 160 years. It is a public company and its biggest owners are so called old Swedish money. In Finland that means Swedish speaking minority, ownership typically via trust funds.

Originally they had and are still having a department store in Helsinki, most likely the best location what you can have, corner of Mannerheimintie and Esplandi. Target was to grow. During the years they opened new stores around Finland and acquired new business areas. Then came the entry to the Russia markets. That generated big loans which didn’t do good for the balance sheet. Today’s situation is roughly: they have divested out from Russia and sold some of their business areas. What they have: one good business (Lindex), one bad business (department stores) and the real estates here and there. Brand Stockmann which value in my opinion is extremely high. And a bad balance sheet (recovered a bit). Main brand Stockmann department stores are not in a good situation, they are making losses. The official cause is that they were late from net shopping and/or it is not well done. That I don’t buy as a main reason, if the bloody net shop is broken, fix it. It is not rocket science. There is something more hidden which cannot be told.

In this situation AGM approved the Board of Directors plan to recruit Mr. Lauri Ratia to Chairman of the Board position. He is known as a trouble shooter and man with the “license to kill”. My first reaction was that it is going to be bumpy ride for the management of Stockmann. I know that from my previous experiences. The second announcement which was made is the agreement with Mr. Ratia and the four biggest owners of Stockmann. The published content was that he is trying raise up the value of the share.

The latter part of the AGM story gives one nice possibilities to speculate and here we go. Why the ownership value is so underlined? I’ve been told that it should be any company’s normal operation. Do the owners just want to have a fatter piggy bank? Or do they want to get rid of it totally, for good? Or are there mergers waiting/planned and they want to have better price for Stockmann? In any cases, something interesting is in pipeline,
Obviously the company has to be cleaned, not only for the speculated big ones, also for the business as usual case. The first step we have seen, 1st day at the office and Mr. Ratia laid off CEO. I think that wasn’t a real lay off, it has been planned already some time ago. It was also announced that they will do the strategy work and after that decisions are made. In my experience strategy work in that situation means that everyone in top management are doing plans/strategy which covers their own sitting muscle. After that the big wind will blow inside the top management and new management is nominated, some of the old ones may keep their seats.

Process must start from balance sheet, one for everyone and everyone for the balance sheet. It has to more or less clean from the debts, zero debts is not a must but closer the better. The question is how to do it? The answer is sell something if you don’t have extra cash. So no cash, what to sell? At this point key the question has to be answered. What is the core of Stockmann in the future? Answer defines what can be sold. The real estates are quite obvious choice. The rest of actions depends what the future Stockmann is planned to be.

This story is not a good source for information to make any decisions for investments, it is just a story.
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