Translation: Original comment published in Finnish on 10/1/2024 at 7:57 am EEST.

The target market for Kesko's grocery business and Tokmanni and Lindex' department store business grew by 3% in August. Food was the main contributor to trade growth, up almost 5%, while consumer goods were down 1%. As in previous months, the decline was driven by apparel, which was down, while home and leisure products were up 1%. Foodservice wholesale decreased 2.5% versus the comparison period, impacted by one fewer delivery day.

Kesko's consumer food business was slower than the market

On the basis of the sales figures already reported by Kesko, the company's grocery sales were clearly below the market, declining by 2%. Wholesale food sales to K-Retailers were down 3%, a clear disappointment compared to the market. Kesko's sales of household and specialty products also declined in August, in line with the market. The exception was Kespro's foodservice business, which continued to show strong market share gains, growing approximately 2%. Although the rate of market share loss in Kesko's consumer food business has decreased significantly since last year, the slower-than-trend market development raises concerns about future competitiveness.

Mixed market development for Tokmanni's key product groups

The consumer goods market, which is important for Tokmanni, has been very flat recently. In contrast, we see the August growth in home and leisure as a positive for Tokmanni. On the other hand, the sharp decline in the apparel category, which has been ongoing for some time, is likely to weigh on the company's Q3 results. We expect Tokmanni to grow 1% in Q3 (old stores ~0%), supported by a store network that is a few stores higher than in the comparison period. From this perspective, the performance of the consumer goods market was slightly weaker than expected in July (-3%) and August (-1%). In other words, the market needs to have a good September or Tokmanni needs to gain market share in order to achieve the level of sales we are forecasting.

Market development continued to be weak for Lindex' department store operations

The apparel market, which is important to the Lindex Group, also declined sharply in August (-6%) and by the same amount in July-August. Although we recently lowered our sales forecast for Stockmann department stores for the rest of the year, our current Q3 forecast (-3%) is still higher than the market development in the first two months of the quarter. Therefore, the forecast risk remains on the negative side.