Finnish trade down in February

Translation: Original published in Finnish on 4/1/2025 at 7:17 am EET.

The target market of Kesko’s grocery trade, Tokmanni and Lindex’s Stockmann division, i.e., the department store and hypermarket chains, declined by 1% in February. The best performing product group was food, where sales remained at the level of the comparison period and which may have been negatively affected by delivery days but also by a few days of strikes in grocery stores. Revenue from non-food products decreased by 5%. Among non-food products, apparel declined by as much as 11%, while leisure goods declined by 3.5%. Sales in the food service market remained flat year-on-year. Despite one less delivery day than in the comparison period, the sales development was still weak, reflecting continued low consumer confidence. Looking ahead to next month, it should be noted that the unusual timing of Easter will weaken the March figures compared to the previous year, especially in the food and grocery trade.

Kesko's consumer sales were slower than the market

Kesko's grocery sales decreased by 2% in February, indicating that the company was slightly behind the market trend. The impact of the price investment program was not yet reflected in Kesko's consumer sales, as they declined by 3%. In its Q4 review, Kesko reported that customer volumes had increased and that customers had found the discounted products quite well. However, we believe that consumption should increasingly focus on products that complement the shopping basket, which would increase revenue at or above the market growth rate. On the other hand, this may require a significant improvement in consumer confidence, which we expect to see by H2'25 at the latest. Kespro, Kesko's food service business, developed more or less in line with the market, which is an exception to the recent trend of gaining market share.

Tokmanni's target market development weak, but the company has recently gained market share

The market development for Tokmanni's Finnish business was poor, with the non-grocery market, which accounts for about half of the company's sales, declining significantly and the grocery trade remaining at the level of the comparison period. However, the company has been a dominating player in the market, which we believe has driven the company to outperform the market on the non-grocery side. Despite the weak non-grocery market, we believe that the growth prospects for Tokmanni's Finnish business are reasonably good as the company invests in increasing its grocery assortment and improving its competitiveness. However, the actual impact of this will be delayed (>1 year), but customer numbers may increase in the short term as a result of increased interest due to strong media attention as well as marketing. We expect the Tokmanni segment to grow by 1% in Q1, which is broadly in line with market developments.

Lindex's key apparel market in sharp decline

The market development was negative for the Lindex Group, with sales in the apparel product group, which is important for the group, declining by 11% in February. Due to the leap year, there was one day less in February than in the comparison period, but even after adjusting for this, the decline was evident. Our Q1 forecast for the Stockmann division is flat year-on-year, so there is downward pressure on the revenue forecast, as sales in January-February were down 6% in the apparel segment and 2% in the overall non-food market.