Puuilo Q1'25 flash comment: Strong perfomance continues

Translation: Original published in Finnish on 06/10/2025 at 09:25 am EEST

Puuilo’s actual Q1’25 exceeded our expectations in terms of both revenue and earnings. This was driven by the increased store network, but especially by improved comparable growth. Cost control was also at a good level. As expected, the guidance for the financial year was reiterated and a good start to the year provides a solid basis for achieving this. A stronger-than-expected report is likely to result in positive estimate revisions.

Strong progress on all fronts

Puuilo's Q1 revenue grew by 18% to 89 MEUR. This exceeded our expectations, which were in line with the consensus (85 MEUR). Revenue growth was mainly driven by new stores (+8 y/y), but also by like-for-like growth (7%) picking up from the comparison period and recent quarters. The number of customers also increased both for the entire network (18%) and comparable stores (7%). Thus, the average purchase remained roughly at the level of the comparison period, which in part reflects continued cautious consumer behavior. According to the company, sales development was supported by more favorable weather conditions than in the comparison period. E-commerce also saw strong growth, although in euro terms, this is a marginal (~2%) part of the company's business. We estimate that the company has continued to gain market share, largely due to a combination of an attractive concept and a low price level.

Sales growth scaled nicely

The Q1 EBITA increased from the comparison period to 10.8 MEUR (12.1% of revenue), exceeding expectations (Inderes 9.1 MEUR and consensus EBIT* 9.6 MEUR). The earnings improvement was driven by increased revenue and favorable development in relative gross margin and fixed costs. In our view, the strong growth of own brands (+38% y/y) supported the approximately 0.5 percentage point improvement in the gross margin (37.1%). Contrary to our expectations, the ratio of fixed costs relative to revenue decreased, which is an excellent performance considering the company's aggressive store expansion rate. The lowest cost items were fairly in line with our forecasts, whereby the improved operating profit explained the higher EPS (EUR 0.09) compared to the reference period (EUR 0.06) and the forecasts (Inderes EUR 0.07 and consensus EUR 0.08).

Achieving the guidance looks likely

As expected, the company reiterated its guidance, which indicates that revenue will be between 425 and 455 MEUR and adj. EBITA 70-80 MEUR. The midpoint of the guidance implies 15% growth and profitability of 17%. Achieving the guidance looks likely after a strong Q1, and if the development continues in the same vein, a positive earnings revision may be possible. The company was quite taciturn in its report regarding market comments, which we will investigate during the earnings day. A stronger-than-expected report is likely to lead to positive estimate revisions.

* No consensus EBITA available