Three companies illustrating the Finnish retail market

Tokmanni, K-Rauta, and Verkkokauppa.com are three distinct and big Finnish retailers. Their results clearly show the Finnish retail market during the last quarters. Tokmanni has had the best performance in the previous four quarters of the three retailers.

Tokmanni with the best (and improving) performance

Tokmanni has maintained robust revenue of around 4% per quarter. Much of that growth has come from opening new stores, as the Like-for-Like growth has been significantly slower. However, Tokmanni has grown faster than the overall non-food market (as reported by PTY).

During the last quarter, Tokmanni improved its operating margins to 36,2%. However, the profit margin of 9% was lower than during the previous quarters. The profit margin is higher than the pre-pandemic margins but lower than during the pandemic.

K-Rauta, with a drastic drop in revenues

K-Rauta saw a rapid revenue increase amid the DIY boom during the pandemic. This boom faded as the economy cooled down after the start of the war in Ukraine. More recently K-Rauta has been reporting quite bad decreases in revenue, and the numbers seem to continue to go down.

Is Verkkokauppa on the rebound?

Verkkokauppa.com was a big winner during the pandemic but has been struggling to return to growth. Since the fourth quarter of 2021, Verkkokauppa’s revenue has only declined.

For Q2/2023, Verkkokauppa saw revenues decline faster than before -10,3 %. However, at the same time, the company was able to improve both the gross and profit margins of the business. The gross margin improvement is surprising, considering that the business’s core categories grew faster than the ”growth” categories. One suspects that the ”growth” categories are essential, especially to improve the margin structure from the notoriously difficult electronics business.

The profit margin improvement comes from reduced costs and improved inventory position. Both Tokmanni and Verkkokauppa have struggled with high inventories. The measures to cut down the inventories have been successful as the inventories have declined. In Verkkokauppa’s case, inventories decreased much faster than the revenues (-19,5% vs -10,3%). Tokmanni’s inventories fell by -7% despite the revenue increase.