Quite a diverse and good discussion regarding the profit warning above. Indeed, this was quite expected, especially due to the weak weather in June. Perhaps the magnitude of the warning was slightly larger than I had anticipated, and I myself couldn’t lighten my position at 11 euro prices, because after disappointments, there’s always a small chance that we might still be positively surprised; Nokian Tyres succeeded in this yesterday. However, it seems it would have been wise to follow the big players this time; some time ago, I noticed in Kauppalehti that as much as 8% of the share capital was on loan, although visible short positions were only about 1.5%.
In my opinion, the main problem is that management’s focus has been scattered in too many directions, and could it be that decision-making power for various experiments and strategy implementation in general has trickled down to lower levels, for example, Anders Kind’s previous 2*Neton neton netto-days in Sweden. From management’s perspective, too much is happening, too quickly, and in too many places.
Of course, there are headwinds coming from many directions right now; on the other hand, for example, low consumer confidence alone doesn’t quite serve as an explanation, because some operators are performing quite well. Weather conditions are known to affect Tokmanni possibly more than competitors, because outdoor and garden products play such an important role during the spring season. When the main category doesn’t perform, the result falters. What about the situation with their advertising flyers? It feels like they end up in my household quite irregularly; there’s no room for laxity here either!
Revenue is indeed growing like bread dough; I wonder if it’s happening again that the role of low-margin everyday goods has grown, as it was specifically mentioned in the warning that more expensive durable goods remain on the shelves. It could, of course, also be that they are bought from competitors, which would then already be a worse thing for competitiveness. I myself only actively follow Tokmanni; @Arttu_Heikura probably has a more comprehensive view on whether competitors are complaining about exactly the same things!? In any case, customers probably visit the stores quite well, but the average purchase seems to be still decreasing, and Tokmanni doesn’t get enough profit from the purchased products.
It was also mentioned above that quite good personal offers come through the App, very often such that if you have bought a product at a so-called normal price, the same product appears in the app with a significant discount within a couple of days. Of course, this too can annoy someone if there’s no need for additional purchases. I personally prefer to spread out my purchases🙂.
Debt covenants must be monitored; it’s quite possible that the autumn dividend will not be paid. With this level of indebtedness and performance, it would not be a big surprise.
Yes, and finally, of course, as a long-term owner, I am disappointed, but I will continue on my chosen path with a 13% ownership stake in the portfolio. Additional purchases will be made according to the situation, and often when it’s darkest, dawn is near🙂.
