Release Date: November 15, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Tokmanni Group Corp (STU:TK9, Financial) reported a 14.3% increase in revenue for the third quarter, reaching EUR 416.3 million.
- The acquisition of Dollar Store has been beneficial, with significant synergies and benefits already visible.
- Customer visits increased in both Tokmanni and Dollar Store segments, indicating improved customer confidence.
- Comparable gross profit margin improved to 35.6% from 34.8% in the previous year.
- The company is well-prepared for the Christmas sales season, with increased inventory levels and strategic direct imports.
Negative Points
- The share of non-grocery sales declined, particularly in high-ticket non-food categories.
- Cash flow from operating activities decreased to EUR 8.1 million from EUR 36.8 million the previous year, partly due to inventory buildup.
- Online sales decreased by 11.3%, accounting for only 1.4% of Tokmanni segment revenue.
- Dollar Store's comparable gross margin decreased to 37.6% due to clearance sales of old inventory.
- The company's net debt to comparable EBITDA ratio remains above the target level, although it has improved.
Q & A Highlights
Q: Can you provide more details on the inventory buildup, especially regarding products sourced from Far Asia versus local sourcing?
A: The inventory buildup is primarily for the Christmas season, including seasonal lights and winter products. Most food products are sourced locally from Finland. The inventory is at a healthy level, and we are confident in our current situation. (Mika Rautiainen, CEO)
Q: Has the consumer sentiment improved since Q2, and how does it affect your inventory strategy?
A: Consumer confidence has improved in both Finland and Sweden, partly due to lower inflation and interest rates. While customers are still cautious, we see more foot traffic. This improvement has influenced our inventory strategy to ensure well-stocked stores for the holiday season. (Mika Rautiainen, CEO)
Q: How much did the clearance sales impact Dollar Store's gross margin in Q3?
A: The clearance sales had a significant impact, reducing the gross margin by 0.7 percentage points. Without these sales, the gross margin would have been at or above last year's level. This was a strategic move to clear old inventory and make space for new products. (Mika Rautiainen, CEO)
Q: What are your plans for store openings in 2025 and 2026?
A: We plan to continue opening new stores, with a focus on Sweden and Denmark. We have about 11 new openings planned for 2025, with ongoing negotiations for additional locations. In Finland, we expect around 10 new openings. (Mika Rautiainen, CEO)
Q: Are there any loss-making stores with long lease contracts that you cannot exit?
A: We do not have loss-making stores. Some stores have lower profitability, but we have improved performance in Finland and have no current issues requiring store closures. In Sweden and Denmark, we are focused on growth and marketing to enhance store performance. (Mika Rautiainen, CEO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
