Positive profit warning from Puuilo and preliminary Q4 information

Translation: Original published in Finnish on 3/10/2025 at 9:30 am EET.

Based on preliminary information provided by the company, the EBITA result for Q4 exceeded the company's own guidance and analyst expectations. This was likely due to a tighter cost structure, as Q4 sales were broadly in line with expectations. We expect the share price to react positively to the news, and we will revise our forecasts in line with the preliminary information in our preview at the latest. Puuilo will report its Q4 result in just over two weeks on Thursday, March 27.

Result exceeded expectations

Puuilo announced this morning that it has exceeded its EBITA guidance for 2024. Based on preliminary information, revenue for the full year was 383.4 MEUR, or 85.8 MEUR for Q4. The outcome was at the lower end of the guidance range, but in line with expectations overall (Inderes 84.3 MEUR and consensus 86.6 MEUR). Revenue was in line with our estimates, suggesting that like-for-like store growth for the year-end was around zero or slightly positive, driven by a challenging market environment and reduced basket size in our forecasts. In other words, the 12% revenue increase was mainly driven by new stores. In addition, the mild winter may have weakened the company's (low) season-dependent sales.

The EBITA result of 67 MEUR (17.5% of revenue) achieved in 2024 exceeded the company's guidance of 60-66 MEUR and analysts' expectations (Inderes 64 MEUR and consensus ~65 MEUR). For Q4, EBITA was 14.3 MEUR and 16.6% of revenue. Thus, the outperformance of guidance and forecasts was driven by the flexibility of the cost structure, which we interpret as a combination of good gross margin and cost control.

Performance can be considered excellent

The positive earnings warning and earnings beat can be seen as an excellent performance compared to the sluggish development of like-for-like stores in Q4. The 16.6% EBITA margin in Q4 exceeded the record highs of the COVID period (2020-2021 Q4: 15.5-15.7%), which we did not expect the company to achieve in the current market environment. On the whole, Puuilo has managed to maintain a tight cost structure despite its growth efforts. We had expected cost pressures in Q4, as we had estimated that the company would need to hire additional staff by the end of 2024 or early January at the latest to prepare for new store openings in winter/early spring. However, we were not blindsided by the positive gross margin development, as the low price-point consumption, which is highly profitable for the company, has probably continued, encouraged by the challenging consumption environment. Nevertheless, we had expected a relative gross margin at the same level as in the comparison period, which means that the estimate overshoot is likely due to both variable and fixed costs. We will update our estimates to reflect the preliminary information at the latest in our preview commentary. Puuilo will report its Q4 result in just over two weeks on Thursday, March 27.