Translation: Original published in Finnish on 12/1/2024 at 6:04 pm EET.

The target market of Kesko, Tokmanni and Lindex's Stockmann division, i.e. department store and hypermarket chains, posted a 2.4% increase in revenue after a sluggish September. Growth was driven by food product groups (4.9%), while durable goods (-3.1%) continued their downward trend. Within durable goods, the apparel product group fell by 13%, continuing the weak trend seen at the start of the year. In the home and leisure product groups, revenue grew by one per cent. The target market for Kesko's food service business grew by 3.4%, supported by an increase of one delivery day over the comparison period. October is the lowest month in Q4, as the Black Friday and Christmas sales push the November-December sales figures to a much higher level.

Kesko's consumer sales development slightly behind the market

Kesko's grocery trade sales grew by 2% in October, and within this, consumer sales grew by around 1%. Thus, in our view, progress was slightly below the market. Kespro, on the other hand, clearly gained ground in the food service market with growth of around 5%. Key to Kesko's market share development will be the price investments that will start in the coming year and the expansion of the hypermarket network. However, it will take several years for these to have an impact, so we estimate that the real potential for market share gains will not be achieved until 2027-28.

Although target market development does not look promising, Tokmanni has several growth-supporting drivers

Market developments in October were mixed for Tokmanni. Apparel, an important market for the company, declined sharply, while other product categories developed positively. The revenue level of the Finnish operations will be boosted in Q4 by the opening of two Tokmanni stores. In addition, the company has announced that it will continue its aggressive price investment in the key quarter of the year, which we believe will support the company's revenue growth. As a result, we expect the Finnish business to grow by 2% in Q4 and by 1% on a like-for-like basis.

Weak market for Lindex department stores in October

The apparel market, which is important for the Lindex Group, fell significantly in October (-13%), more than the average for the year (-5%), and the durable goods market as a whole fell by 3%. Our Q4 forecast for the Stockmann division is -2%, so the start of the quarter was weaker than we expected, given the high proportion of fashion in total revenue. However, the Black Week in November-December and the Christmas sales will have a significant impact on total Q4 sales, so we believe their success will be crucial.