Domestic trade progressed well in May

Translation: Original comment published in Finnish on 07/01/2024 at 7:10 am EEST

 The target market for Kesko’s daily goods trade, Tokmanni and Lindex (department store and hypermarket chains) increased by 6% in May to 797 MEUR. Food products continued to grow steadily by about 5%, while the durable goods market increased by almost 9%. Within durable goods, growth was split between clothing, up 9.4 %, and home and leisure, up 8.5 %. According to our estimate, the market development of durable goods has been supported by the warm weather in May and demand that moved from the weak April. Kespro’s Foodservice market decreased by one per cent, while delivery days remained at the level of the comparison period.

Kesko below the market

Kesko’s daily goods trade grew by 3% in May, within which wholesale to retailers grew by 3% and Kespro continued to grab some market share with a 1% increase. Kesko also reported an increase in its sales of durable goods. We believe that Kesko performed slightly more subdued than the overall market in May but consider the development in line with the market in the early part of the year as positive news for market share development.

Market developments should support Tokmanni's Q2

Although April was poor in Tokmanni’s important durable goods market, strong sales in May with higher volumes are likely to support the company’s Q2 development. We believe that market development has been similar also in June, which, together with the strong May, will bury the sluggish April. We expect Tokmanni’s Finnish businesses to grow by approximately 4% in Q2, and see no immediate need for forecast changes.

Lindex Group's Stockmann stores supported by the timing of the Crazy Days campaign in Q2

The development of the clothing market, which is important for the Lindex Group,  was 9% in May. However, due to weak April, growth in April-May only amounted to 3%, while we expect Q2 growth in the Stockmann division to be 7%. This is significantly supported by the timing of the Crazy Days campaign more towards Q2 (vs. Q1). We believe May’s growth compensated for the weakness in April and was therefore slightly positive, but relatively neutral news considering our forecasts.