Tokmanni - House of Opportunities?

[Jukka7]

“The Tokmanni Group continues its measures to boost sales and improve profitability. These measures include, among other things, improving marketing efficiency, strict cost control, optimizing supply chain efficiency, and streamlining processes.”

Sounds like the death spiral is beginning. The measures suggest that more often than before, items won’t be found on shelves even if the online stock balance shows a positive number, aisles will be blocked by unpacked roll cages, and checkouts will be congested due to missing price information and lack of staff.

[Talouskukkaro]

@Talouskukkaro

Two things bother me about this agreement: 1) How does this benefit the average consumer? Is the benefit that when visiting Tokmanni, one can buy quark, dip, and chicken wings, or if one happens to live near a Tokmanni store, one might be able to buy groceries closer than before? And 2) the execution seems to lack a proper plan. Let’s first try it in a few dozen stores, and then perhaps a little in some other stores, and see what happens.

In my opinion, this is a completely terrible deal and the CEO should be replaced within a couple of years when this goes completely wrong.

With the profit warning, it’s starting to become clear why the CEO was so eager to retire. I am not at all impressed with Rautiainen’s way of leading Tokmanni. I fear the worst is yet to come.

[pt99659]

@Jukka7

cannot be found on the shelves even though the online stock balance shows a positive number, aisles are blocked by unpacked roll cages, and checkouts get congested due to price information issues and lack of staff.

This is why Tokmanni has always been a place I avoid going to (unless there’s a really good offer on a product I want). It’s more the rule than the exception that stock balances are incorrect and there’s only one employee at the checkout with a long queue behind them.

[JuhaR]

@StockTycoon

Had to take advantage of this sale and buy 1600 more.

I haven’t noticed a sale myself. Rather, a fairly reasonable share price reaction to the earnings guidance being lowered by almost a fifth.

The profit warning came a day later than last year. Albeit even uglier. Now I’m just wondering if it will repeat again that the sustainability of the new guidance will be speculated and the share price will slide significantly, similar to last year. Especially the messiness of DollarStore certainly provides grounds for a critical view of the company’s situation.

[Gadus]

The company’s comparable operating profit in 2024 was approximately 100 million euros, of which 77 million came in the latter half of the year. According to preliminary information now provided, comparable operating profit in the first half was approximately 10 million euros, which is 12 million euros less than a year earlier.

For the lower end of the guidance of 85 million euros to be reached, the operating profit for the rest of the year would practically have to be at the same level as last year. Based on the first half’s performance, believe it who will.

[elakkeelle35v]

@StockTycoon

Temu purchases will be subject to a 2€ EU processing fee, which improves the competitiveness of the cheapest category.

Yesterday, I visited my local Tokmanni after a long time, and there were quite a few people even at the very end of closing time, and about 10 shoppers in the checkout queues.

I myself have ordered from Temu probably about 10 times, with purchases in the 25-40 euro range, and a 2€ processing fee will not affect my behavior at all, nor do I believe it will affect other Temu shoppers. Even with the additional 2€ fee, the items are probably 50-70% cheaper than anywhere in Finland. Delivery speed is also excellent, with packages arriving in about 1-2 weeks at a Postnord parcel locker. It was different with, for example, Aliexpress and other Chinese stores back in the day when you had to wait 1-2 months for goods.

There are certainly things I wouldn’t buy from Temu, such as clothes, food, kitchen utensils (like a frying pan), and larger items - but for smaller trinkets, I always check Temu first. In the last year, I’ve bought shoelaces, sewing supplies, bike bags, bike maintenance supplies, keyboard stickers, digital timers, tape measures, tape, and cables from Temu, among other things. Everything has been of perfectly acceptable quality for its price - suitable for my intended use. Some are things that aren’t even easily found in Finland, and some are the same trinkets you’d find at Tokmanni, but Tokmanni just slaps on its own and others’ margins. I wonder if the sale of such “smaller trinkets” is even very important for Tokmanni - I’d guess that the margins come from entirely different places, so is Temu really such a big challenger for Tokmanni, or is the customer flow leaking to, for example, Puuilo, Motonet, Jula, or similar stores? Even though I shop at Temu and visit Puuilo, I would still go to Tokmanni to buy, for example, a frying pan, bedding, towels, food, etc. - I wouldn’t order these from Temu myself.

The length of the checkout queue, by the way, doesn’t always indicate that the store is somehow very popular, especially in Tokmanni’s case, as usually only one checkout is open, and one customer can stop the entire queue from moving for 5 minutes while the seller sorts out a wrong price or something similar, which doesn’t sound at all exceptional for Tokmanni.

I was briefly considering buying Tokmanni on this dip, but my poor personal experiences with shopping at Tokmanni still weigh more heavily, so I’ll pass this time too, even though it’s on sale.

[Kivikko]

I think I criticized Tokmanni’s customer service and pricing policy a couple of weeks ago. I compared their business policy to Puuilo. I got some flak for that. Tokmanni cannot be compared or criticized. I deleted the message. In Tokmanni stores, I’ve been disappointed with the special offer products, of which there are very few on the shelves. Additionally, Tokmanni has stores with two different price points. However, I’ll compare them now: Tokmanni has a bit of everything, but the quality and price don’t impress. Puuilo has more, and much more professional-grade goods, and the prices for these are cheaper. Tokmanni advertises that “an opened package is a purchase decision,” meaning returns are difficult. Both stores are in my locality, and I, for one, have switched to Puuilo, and I’d get clothes etc. from Temu before Tokmanni. Well, Citymarket and Prisma have quite good clothing items. I’m sure some shareholder will flag this too soon.

[LappuLiisa]

Thanks for this heads-up, I also did the same after your message.
It was crystal clear that with such a miserable early summer, a good result couldn’t come.

[Denny]

@StockTycoon

Yesterday, after a long time, I visited my local Tokmanni and there were again a good number of people right at the end of closing time and about 10 buyers in the checkout queues.

Those ten buyers have been there since the morning because the checkouts can’t handle the volume.
The result was dismal, but let’s say that based on empirical observations, it could have been even worse. In principle, there would be a market niche for Tokmanni’s selection and concept, but it just seems that people prefer to buy everything they have there from somewhere else (hypermarkets, Puuilo, Temu, Kärkkäinen…).

[jps]

Tokmanni has probably not been a discount store for ten years; its price level is clearly higher than that of discount stores. As consumers’ financial situation has been worse for a few years now, this has been noticed, and consumers looking for discount stores are heading to them. An old reputation doesn’t last forever; realities hit at some point.

[StockTycoon]

Tokmanni has increasingly shifted its strategy towards selling certain brand products cheaply in campaigns. The poor probably don’t buy them, and the potential target group might not be bargain hunters.

In the food section too, more and more quality brands have appeared in the selection. Yesterday I noticed that Liguori pastas had appeared on the shelf next to Rummo, a few percent cheaper than in the region’s Prismojen, which previously had the lowest prices for these. But the masses don’t know how to buy these, but rather, for example, the more well-known Barilla.

Perhaps the problem is largely that products are offered that the traditional customer base does not primarily seek. They are trying to be trendier, but the customer base has not changed in this direction at the same pace. Puuilo thrives with a more down-to-earth selection.

[Jukka7]

@jps

Tokmanni has probably not been a discount store for ten years, but its price level is clearly higher than theirs.

Probably not really ever, even though it tries to maintain a discount store image. Three bottles of soap for ten euros from an industrial hall-like store on a dirty pallet feels like a better deal than one bottle of the same soap for 2.95 from Citymarket’s cosmetics section. When money is tight, people probably compare prices more and not just the store’s image.

[Needles]

As an owner, I’m not very worried yet. A seemingly competent person is coming to replace Rautiainen, and I’m also expecting a good recruit for the autumn to replace Heimo as the new supply chain manager. Tokmanni has been using Relex since the beginning of the year, and I’m sure we’ll start getting some added value from it soon. Relex is already in use at Dollarstore, so I’m sure some synergy benefits will gradually start to emerge.

If we’re still struggling next year while competitors are thriving, then I might already get worried. Until then, let’s calmly collect dividends, but I’m unlikely to add more shares to my portfolio.

[jps]

@Jukka7

Not really ever, even though it tries to maintain a discount store image.

Tokmanni’s roots are very strongly in discount retail, and the corporate image achieved at that time has endured very well despite changes in price levels. The company’s management will face a very significant strategic challenge when customer surveys show that the discount store image has largely faded from perceptions. This means that the entire corporate brand must be rebuilt, and a decision must be made about what kind of image will be pursued, and the product selections and pricing adjusted to support it.

[Divinesia]

The forums are full of negativity, and partly for understandable reasons. But then when you realize Tokmanni’s market value is around 550 million and they are still potentially making 100 million in profit this year, then…

Maybe bankruptcy isn’t coming tomorrow after all.

[Gadus]

It’s still a long way from 100 million in operating profit to the bottom line, if we even get close to it eventually.

[belfastinbingviini]

Exactly! Puuilo is currently the cheap store in perception and in practice. Tokmanni is unfortunately falling between the cracks from all directions. The food department and its prices are not even a challenger to the S- and K-groups. The sports department is not a challenger to sports stores in prices or at least in quality. When there’s hardly any information about the fishing department and car spare parts are not sold, then what is sought from there?

Well, toilet paper, of course. That is, if 32 rolls are on sale for dirt cheap. If not, then it’s just a quick walk past the checkout. This is not profitable business.

What would I do if I were Tokmanni’s development director? I would get the fishing departments in top shape by hiring a dedicated jigging/ice fishing enthusiast for each store, who does it with a big heart and as a self-taught expert. They would prepare ready-to-sell jigs and build ready-to-use bait rigs for salmon anglers. For cabin owners, they would sell the best fishing nets and fish traps, not any junk. Next, I would limit the food department to filter bags, coffee, ketchup, mustard, quality tuna, noodles, and pea soup. I would stop, as unprofitable, disregarding people’s common sense and the attempt to sell hard old bulk candies at the same price as the Citymarket merchant next door sells premium Candyking candies straight from heaven.

So, half-sized premises, a few competitive and high-quality departments, and seasonal products in perfect order. This is what Puuilo does, but not quite as well.

[JuhaR]

@belfastinbingviini

The food department and its prices are not even a challenger for the S- and K-groups.

It depends a bit on what size of stores we are talking about. It’s probably not Tokmanni’s intention to be able to challenge hypermarkets in prices. Spar will also practically compete in the category of markets and at most supermarkets.

@belfastinbingviini

What would I do if I were Tokmanni’s development director? I would get the fishing departments in top shape by hiring a dedicated jig/ice fishing enthusiast for each store who does it with a big heart

A couple of hundred new employees and fishing gear for every store at the expense of other products?

Efficiency in personnel costs is one significant thing for a company like Tolmanni. Granted that it will then reflect in the quality of the customer experience.

[Haddock]

I might have been partly responsible for this, or at least I assume so from your message. If so, the same thought still applies – at least in my opinion. Puuilo has the same discount store elements and items as Tokmanni, but there is a lot of difference in the sales mix between the two.

But where could Tokmanni learn from Puuilo? In my opinion, in many things, but bringing up a few generic points, here are a few observations:

1/ Puuilo sells fast-moving goods with a good margin. This works really well for Puuilo’s current situation, i.e., for a growth company! (Puuilo 50 stores vs Tokmanni 200 stores, in Finland).

2/ Puuilo’s item counts are remarkably low compared to Tokmanni. This works for Puuilo. Should Tokmanni drastically reduce its item counts and seek profitability through that? Don’t Puuilo and Normal operate this way? And as I understand it, DollarStore also operates with a smaller item count and is damn cost-effective?

3/ Tokmanni’s and Puuilo’s growth? Where does the growth company Puuilo seek growth from? Should it not increase item counts like Tokmanni, should it not expand abroad like Tokmanni? Should it not increase the number of physical stores like Tokmanni? I don’t know, it’s a difficult case.

To put it populistically, one could say it’s easy to grow from a few stores to 40-50 stores, but to grow to 200 stores, considering the extra “couple of hundred stores” abroad, that’s not easy. Tokmanni probably grew in the same proportion as Puuilo back in the day, from a few tens to hundreds…

Well, the idea was to bring up things from different perspectives; it’s not easy, and I especially apologize to @Kivikko – by no means is it my intention that someone feels my writing is such that they have to remove their own post. My sincere apologies!

And still, and nowadays, I have a fairly large holding in Puuilo – it just keeps growing! (great company!!) and nowadays a much smaller holding in Tokmanni, due to damn poor profitability.. (I still go and buy the good club offers!!, it really has cheap stuff – I don’t understand why people say it’s expensive, it’s actually cheap when you buy the cheap stuff for home – I don’t understand!)

PS. Could someone tell me an anecdote that puzzles me? People keep repeating that no one visits Tokmanni, all stores are empty… But then when you look at 01-06/2024 vs 01-06/2025, revenue is +3%. Doesn’t that mean that buyers, i.e., customers, are 3% more than in the corresponding period last year? How does this mean that fewer people are at the checkouts than last year?

[Kivikko]

I don’t own either stock. I have considered Puuilo. There’s a certain small carelessness at Tokmanni across the board. I myself might also buy toilet paper or sparkling water. Other things then with some loyalty program benefit and an app. Sale items run out on the first day. Staff can’t be found and they don’t know anything about the products. In May, when the flowers arrived, the whole stock froze, and later they were left unwatered. Should there be an old-fashioned store manager who would ensure things run smoothly? Now it feels like the customer is not almost always right. Cashiers and other staff could greet customers. This is already done in many stores. Was Kyösti Kakkonen right after all when he mentioned at some point that “they ruined a good store”? Improvements are needed.