Translation: Original published in Finnish on 06/11/2026 at 09:25 am EEST

Puuilo's Q1 earnings were very strong, as earnings grew by as much as 50%. The strong earnings development was driven by rapid revenue growth across the store network, as well as an improved relative gross margin and the scaling of fixed costs. At this rate, the 2026 guidance reiterated in connection with Q1 is starting to look cautious, especially regarding EBITA. A stronger-than-expected Q1 result will lead to at least slight upward revisions and a positive opening of the share price.

A strong quarter in terms of sales

Puuilo's Q1 revenue grew by a whopping 16% year-on-year to 104 MEUR. The outcome was slightly stronger than expected (Inderes 96 and consensus 100 MEUR). Revenue growth was driven by new stores (+6 y/y) as well as like-for-like growth (8%) that continued to pick up. The number of customers also increased both for the entire network (15%) and comparable stores (6%), which we believe signals the attractiveness of Puuilo's concept. Based on this, we can state that the average purchase of the company's customers increased for the second consecutive quarter. This may indicate a structural turnaround in customer demand, as the average purchase has decreased roughly since 2022. Growing shopping baskets were also reflected in online sales (+18%), where higher-priced consumer goods are particularly sold. 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.

Improved earnings are proof of the business model's scalability

Puuilo's Q1 adjusted EBITA rose by as much as 50% from the comparison period to 16 MEUR. Q1 profitability (15.7% of revenue) is the company's highest quarterly profitability in its listed history. The earnings improvement was clearly stronger than expected (Inderes 10.9 and consensus EBITA* ~12 MEUR). The earnings growth was driven by both an improved gross margin and a cost structure that scaled with sales growth. The gross margin, which improved by around 2 percentage points to 39%, was supported by significant growth in profitable private label products, whose development has been very positive in recent years. The ratio of fixed costs to revenue decreased as both personnel costs and other expenses scaled. We believe this communicates the strength of Puuilo's business model, meaning that as comparable growth accelerates, the costs of comparable stores and administration remain almost unchanged. Overall, we consider the earnings performance particularly strong, considering that the company is currently undertaking a ramp-up project for its Swedish business, which has increased Puuilo's cost base. Adjusted EPS (EUR 0.15) rose significantly above expectations, driven by a faster operational earnings improvement than both the comparison period and estimates (Inderes EUR 0.08 and consensus EUR 0.09).

Guidance starts to look cautious

The guidance issued for 2026 was reiterated in the context of the report. The guidance indicates that revenue will be between 480 and 510 MEUR (2025: 442 MEUR), with adj. EBITA between 80 and 90 MEUR (2025: 77 MEUR). Overall, the guidance meets our expectations and the consensus, with the midpoints of the ranges at the level of the forecasts. Measured at the midpoints, the company expects revenue growth of around 12% (2025: 15.4 %) and an EBITA margin of 17.2% (2025: 17.4%). If comparable revenue growth similar to Q1 and even a slight improvement in profitability continue through Q2-Q4'26, the company's earnings will exceed the current guidance. Increased geopolitical tensions naturally bring additional uncertainty to the company's performance in 2026, but the company has tried to account for these in its guidance. In our view, this is particularly emphasized in the revenue growth guidance, as the company announced it would open 8 stores this fiscal year, whereas in recent years, a maximum of 7 stores per year have been opened. A Q1 that is clearly stronger than our estimates will, in our view, lead to at least slight positive estimate revisions and a positive opening of the share price.

Preparations for internationalization, which is key for long-term growth, continued in H1. The country manager for Sweden started in early June, and according to the company, several negotiations for the first retail location are currently underway. The intention is to open the first store in Sweden within 15 months, but we estimate the opening will occur in 2027 based on the company's average store preparation time. Puuilo also reiterated its estimate of additional costs (~1 MEUR) arising from the preparations for its Swedish operations, emphasizing a cost-controlled approach.

* Exact figure is not available