Slow trade in June

Translation: Original comment published in Finnish on 8/2/2024 at 7:16 am EEST.

Sales of the Finnish department store and hypermarket chains, i.e. the target market of Kesko, Tokmanni and Lindex, decreased by 2% in May to 779 MEUR. The product groups home and leisure declined by 6%, which, together with a 12% decrease in clothing, brought the total durable goods trade to 7% below the comparison period. Grocery trade, which faced a difficult comparison period, remained at the same level year-on-year. In June, Kesko's food service target market was down by up to 11% from the comparison period, when there were two more delivery days than this year. Overall, we see June as a sluggish month for the Finnish domestic retail sector, and the sales spike seen in May was not enough to boost Q2's lackluster growth (0.2%). The uncertainty that characterized the past quarter is likely to continue into the rest of the year, and the increase in the general VAT rate does not inspire much confidence for the development in H2. 

Challenging market reflected more strongly in Kesko's figures than elsewhere

Based on Kesko's reported June sales and Q2 revenue figures, Kesko's grocery business has been one of the main sufferers in a challenging market. Overall, Kesko's June performance in the consumer trade was significantly weaker than the market, although we believe that fewer delivery days than in the comparison period had a dampening effect on growth. As usual, Kespro won market share by a small margin despite falling sales. Although the growth gap between Kesko and its competitors has narrowed during 2024, the June figures are evidence that there are still many stones left to be turned in order to gain market share.

Tokmanni's profit warning signals a tough June

The durable goods market, which is important for Tokmanni, was both volatile and weak during Q2. Tokmanni's profit warning added to the message that May's sales rebound was temporary and that June continued to be sluggish. Although our forecast was fairly in line with Tokmanni's preliminary Q2 figures, the message of the press release was a challenging one in terms of the outlook for the rest of the year. According to our estimates, the group's weakness will primarily be reflected in the Finnish figures, but the performance in Sweden has also lagged behind the recent market development (grocery market growth in Q2'24 2% vs. ~6% in 2023-Q1’24).

Timing of Crazy Days campaign helped Lindex's department store business outperform the market

The clothing market, which is important for the Lindex Group, declined sharply in both Finland and Sweden. This was already reflected in the reported Q2 figures, with the Lindex chain's revenue down 4%, while the positive development of Stockmann department stores was supported by the timing of the Crazy Days campaign, which was more pronounced in Q2 than in the comparison period. The volatile trend in the clothing market has been ongoing for some time now, creating some uncertainty for the remainder of the year.