Finnish market for department store and hypermarket chains grew in September

Translation: Original comment published in Finnish on 10/31/2023 at 8:45 am EET

The revenue of Finnish department store and hypermarket chains published by the Finnish Grocery Trade Association (PTY) grew by 2.9% in September from the comparison period. Contrary to previous months, the consumer goods trade showed a fairly clear decline in September, while the growth of the overall market for department store and hypermarket chains was driven by grocery trade. The decline was strongest in the clothing product group (-12%), which, we believe, hits Stockmann the hardest, but also has an impact on both Tokmanni's and Kesko’s consumer goods trade. The total grocery (daily goods) trade grew by 5.1%, which was still driven by price inflation, but the trend has been turning since the start of the year and we expect volumes to slowly pick up as inflation eases. As expected, the food service market slowed down by 1.6% from the previous year, which Kespro’s sales figures sort of reflected.

Stockmann’s sales figures were affected by campaigns and store changes

Stockmann reported its Q3 figures already last Friday. Department stores' revenue decreased by 16% in Q3. This was influenced by the timing of the Crazy Days campaign and the decrease in the floor area of the Itis department store, but the weak September in terms of clothing sales was also likely reflected in the figures.

We estimate that Tokmanni has fallen slightly behind Q3 market development

The actual figures for department store trade in July-September were in line with our expectations for Tokmannni in the big picture. In recent months, Tokmanni’s performance in terms of revenue has fallen somewhat short of the market, which we suspect is the result of price competition and a momentary outflow of customers (customers running after other good offers). However, we do not believe that customer outflow is a permanent trend, as not all competitors can offer equally affordable campaigns to Tokmanni in the long run. We expect Tokmanni’s comparable growth in Finland to be 1% y-o-y in Q3. We note that the market figures for September do not, however, reflect the actual figures for the past quarter (Q3), as the consumer goods market grew in July-August. Tokmanni has not yet reported its Q3 result, which it will release on Friday November 17. Tokmanni’s Finnish Q3 figures will be improved by new openings and group figures will be improved by the Dollarstore acquisition completed at the end of the summer.

Kesko had a weaker month than the market in grocery trade

Kesko’s consumer goods sales in September followed market figures in the big picture. On the other hand, Kesko’s grocery trade sales decreased based on reported September figures, while the market itself rose. We believe that this is the result of still weak consumers purchasing power and intensified competition. In the declining food service market, Kespro managed to increase its revenue, but more moderately compared to the previous months. This, in our opinion, signals that Kespro’s concept is working and its good competitiveness