I, on the other hand, thought that we hit Inderes’ forecasts quite well, and revenue even exceeded them (I give less weight to other parties’ forecasts as I don’t know what all the “consensus” has included). Profitability, of course, now falls short of forecasts simply because it’s a Finnish company, so such a small shortfall was more of a forecast beat for me .
And what does some online store matter if business is excellent in brick-and-mortar stores with good profitability? I, for one, don’t want to order anything and then have to return it if it’s not suitable; I’d rather go and buy it in person .
Well, probably because it’s the fastest-growing consumption method, and if you don’t develop in that area, competitors will take those sales.
Kärkkäinen is, of course, a poor comparison due to its sparse store network, but its online store accounts for about a third of its sales. For many discount stores, it’s like the sales of one store.
I believe that in Puuilo’s case, part of the problem is that most of the goods sold are things that are needed “right now,” such as bolts and nuts, which drives customers to brick-and-mortar stores to get them, instead of being able to wait three days for the post office to deliver them.
Here’s a first look at the results before the earnings reports:
Analysts’ growth expectations for Q4 need a slight adjustment, at least based on the initial review of the report. We’ll see what happens to the forecasts for future years at the end of the day.
In the online store, it seems that high-priced consumer goods are the biggest bottleneck, as they are sold significantly more there than in physical stores.
I would buy more if it wasn’t already in my portfolio with a reasonable weight. Not everything needs to grow crazily all the time, and analysts’ talk is mostly useless as a rule. One must look at the business itself and whether it has vitality. Buffett also didn’t rush with these things; instead, he looks beyond one quarter. Of course, competition has tightened and the average purchase has decreased, but the concept is good, and if it performs well in a low-growth environment, then everything is okay.
The market seemed to have predicted a positive surprise for Puuilo, which resulted in a negative share price reaction.
I personally don’t see any business weakness in the big picture. Feel free to challenge.
I wouldn’t be worried about the decline in online sales. In @Arttu_Heikura’s interview, this was justified, for example, by the fact that stores have opened in smaller localities, which has enabled direct store visits. And as stated, there is often an immediate need for the product.
In my opinion, the guidance looks cautious (the midpoint means approximately 0-growth in adj. EBITA for Q4). There might, of course, be a reason for it, if consumer demand is indeed weak. We’ll see then. If the gross margin had been under pressure, I would be more concerned.
Arttu interviewed Puuilo’s CEO Juha Saarela regarding Q3.
Topics:
00:00 Introduction
00:10 Q3 development
00:46 Average purchase decreases
03:20 Online sales
05:24 Profitability weakened
06:19 New stores at a record pace
08:30 Changes in the competitive environment
10:45 Guidance refined
Arttu says hello to the table, because here’s a new company report from Puuilo after Q3.
Puuilo reported a well-anticipated result with revenue and profit growing at a good 10% rate. We still see the company’s long-term growth and value creation potential as strong, in addition to which the stock’s valuation has also moderated. We raise our recommendation to add (previously reduce) and reiterate our target price of 14.5 euros.
Quoted from the report:
Cash flow at a healthy level, and balance sheet in strong condition
For Q1-Q3, the company has accumulated 65 MEUR in cash flow, which is an increase compared to the reference period (44 MEUR) due to higher profit. Precise figures for calculating free cash flow are not provided in the Q3 report, but the investment pace for the current year has been moderate. With the expanded store network, rental payments have naturally increased, but free cash flow is likely still at a healthy level. Puuilo’s good balance sheet position is reflected by a net debt/EBITDA ratio (IFRS 16 adj.) of 0.5x, while the company’s self-imposed upper limit is 2.5x. This also secures financing for a faster growth pace (e.g., internationalization or acquisitions) if needed. So far, however, the company has been able to expand through self-financing, which reflects the business model’s strong cash flow profile and low investment needs.
PUUILO PLC, PRESS RELEASE, December 11, 2025, at 8:00 AM
Puuilo will open a new store in Vaajakoski, Jyväskylä, in spring 2026. The store will be located on Haapaniementie, in the premises of the current Marine machinery store. Marine will move to adjacent premises on the same plot. The retail space will undergo renovations, during which a garden store will also be built. The store will employ approximately 15 people upon opening, and recruitment will begin early next year.
OP also moved to an Accumulate recommendation (Reduce) and maintained the target price at 14.50 euros.
Despite a slight Q3 earnings disappointment, the company is still progressing in the right direction in Finland and is successfully implementing its strategy.
The moderation of valuation multiples relative to our almost unchanged earnings estimates has improved the risk/reward ratio, and in our opinion, the valuation now offers a better entry point into a high-quality growth story than before.
Quoting myself, I drove past again and the parking lot is full of cars even though the grand opening hasn’t even been held yet. It looks like stocking the shelves and final installations are underway at the upcoming Puuilo in Heinola.
There is no information yet. Recruitment for a country manager is currently underway. They might have more details on the timing in the spring. It seems that, at best, the first store could be opened in H2’26. 2027 would be a slightly more realistic guess.
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