Mr Tokmanni (?) will be active at Verkkis in the future, so it seems like quite a strategic move of his own
Verkkokauppa.com Plc strengthens its management team and appoints Juha Valtonen as Commercial Director Verkkokauppa.com Oyj vahvistaa johtoryhmäänsä ja nimittää Juha Valtosen kaupalliseksi johtajaksi | Kauppalehti
Probably a good move for him. At least K2 won’t be sniping about pricing anymore. That news from Verkkis explained well what he was responsible for at Tokmanni.
Valtonen moves to Verkkokauppa.com from Tokmanni, where he serves as Sourcing and Purchasing Director and has been a member of the Executive Management Team since 2020. In this role, he has been responsible for sourcing, pricing, and private label development in Finland, Sweden, and Denmark, and has led an organization of over 140 people. He has also held responsibility for the company’s sourcing unit in Shanghai.
The risk of a profit warning is apparently being priced out.
The guidance has already been tweaked a couple of times throughout the earnings season, and here we are still waiting for a profit warning.
Is it okay to post some of my own views here regarding Tokmanni’s swelling inventories and their potential impact on cash flow?:
In my opinion, Tokmanni’s “swelling” inventories are not a problem but largely a strategic investment.
Tokmanni’s inventories look large on paper and have a negative impact on cash flow, but I believe that, in practice, this is partly a strategic investment made in connection with international expansion, which will improve sales efficiency and margins in coming seasons.
Tokmanni’s inventories 2022–2025: +33%
(248.8 MEUR → ~331.9 MEUR)
Finnish Tokmanni stores were stocked up at the turn of the year with new Kotikulta and other Tokmanni Group private labels. These batches were purchased in larger volumes than before, as a significant portion is also directed to Dollarstore and Big Dollar stores (145 locations) in addition to Tokmannis (204 locations). If Kotikulta was previously only a small part of the selection, the range and quantity have now increased significantly.
In the online store, there are 1,396 Kotikulta products, including different colors and models. Excluding variants, unique products could be estimated at around ~500(?). The revamped and very extensive selection includes plenty of home decor, towels, sheets, and tableware, and shelf space for these has been clearly increased compared to the past. Large inventories grow the stock, but at the same time, they prepare the stores for future sales and free up resources for managing other stock.
In Sweden, Dollarstore inventories grew by about 50% (99.1 → 145.8 MEUR). My own view is that a significant part of this relates to the inventory of the new product range and the expansion of the store network, not old, slow-moving stock. Kotikulta and other novelties brought from Finland are performing well in Sweden, which the company management has also hinted at.
A seasonal department learned from Sweden has been copied to Finland right at the front of the store. Selling seasonal products by shelf category is occasionally challenging and burdens inventories, but separate seasonal departments allow for selling larger quantities more efficiently. The most administratively challenging products (“knick-knacks”) are put on display immediately, which streamlines their sales from both existing stock and new batches. Additionally, these departments allow for aggressive clearing of seasons if necessary (-30% / -50% / -70%) if goods do not move as expected. Ever-larger volumes keep purchase prices low and margins high, so such discounts do not make the sales loss-making. These factors significantly improve inventory turnover.
Many newer stores also feature the winding aisles typical of IKEA, as well as the familiar Euro-pallets placed in the aisles, which force customers to walk past the merchandise and effectively expose them to promotional and seasonal products.
My own conclusion is that the inventory visible as large stocks and weakened cash flow has now finally arrived across all segments, and its realization into cash flow will happen with a delay in future periods, possibly partially already in the Q4/2025 results. More realistically, perhaps only after the spring. Management has at least put their weight behind it.
I also believe that Tokmanni’s clear and suitably everyday selection, the practicality of the seasonal side, and the expansion into groceries can be the key to a steady growth in customer flow. If people used to visit Tokmanni once a month, the grocery side could increase the visit frequency to as much as 1–2 times a week. This makes Tokmanni a drawcard that stands out from its competitors, even if margins were to narrow slightly momentarily.
Even though the overall picture looks stable to me and the stock is priced according to my views, I will continue to monitor the situation until the margin turnaround in the Swedish business is clearly visible and, at the same time, the Finnish business demonstrates its ability to maintain current margin levels as the selection and grocery side expand. If it hits the level of seven [euros], I’ll be filling up my buckets.
Great insights into the current situation and the future through the eyes of Tokmanni’s CFO Tapio Arimo. The article covers, among other things, logistics, the expansion into Sweden, the Spar chain, and Tokmanni’s overall plans.
”We’re bringing our product range there; actually, everything is changing there. Pricing is being revamped, marketing has practically been built up from scratch, the entire logistics chain is changing” – CFO Arimo, quoted in the article above.
Just out of curiosity, why did Tokmanni buy Dollarstore in the first place? Or pay anything for it at all? Was that move really thought through to the end? I don’t remember the original justifications anymore, but then again, investors have short memories.
It’s good that they’re trying to pull themselves together, but this decline has been going on for a long time and people have grown tired of DS stores. Competition is fierce, which is likely why DS was sold to Tokmanni, as market share was slipping away to competitors. Ö&B, Rusta, and Normal—those are the core competitors in my opinion.
Whether Swedes are interested in a Tokmanni-style store remains to be seen; I personally doubt it, but time will tell.
Doesn’t a large part of Tokmanni’s margins come from Chinese goods? With these volumes, one would think there would be a lot of synergy benefits.
Yes, buying more surely makes things cheaper. BUT does it make sense to pay that amount just for store locations and employees if the selection, brand, and concept were crap from the start? For the sake of economies of scale?
Did anything related to warehouse operations come with it? Apparently not, since the logistics are being revamped.
For a long time, I was under the impression that they were buying efficiency, a functioning concept, and something to take Tokmanni Finland’s excellent store network and sh*t-tier online store to the next level, but the case is exactly the opposite.
Why didn’t Tokmanni open its own stores in Sweden or buy some “carcass” like Rusta did back in the day with the Hong Kong stores in Finland?
Does Tokmanni know that Swedish consumers want to buy Tokmanni’s private labels, even if they have demand in Finland? If they know, then fine, but why an acquisition? If they are just practicing this now and we’ll see soon, then boy, what a gamble. 
Was it the case that Dollarstore was more profitable than Tokmanni before Tokmanni acquired it? And now it’s the other way around.
Maybe they went for broke? Or was it a “grand idea” from the outgoing CEO? Well, time will tell. Puuilo, however, intends to proceed with its old strategy into Sweden—playing it safe with a few stores to see if the same is possible as in Finland. Perhaps a less ambitious approach at Tokmanni would have been appropriate as well. Profits come slowly, but losses come quickly—that’s how the current operations look from the outside. Of course, this aggressive stance could yield massive profits if successful. I certainly can’t fault Tokmanni for a lack of courage.
That is indeed what the article says.
“Arimo points out that Finnish brands have a good reputation in Sweden. Dollarstore has traditionally operated in a very low price segment.”
This impression is correct, as at the time of the acquisition, management told investors, analysts, and other media that they found Dollarstore’s concept attractive. Joint procurement was also one of the justifications for the purchase, and the synergies available from them justified the otherwise expensive-looking purchase price.
By 2025 at the latest, it became clear that the concept and Dollarstore’s operations did not fully correspond to how Tokmanni viewed things in 2023. Now Tokmanni seems to be relying on the same model that brought growth in Finland, namely increasing the number of SKUs (product titles). In addition, there is the expansion of the store network, but here the company has taken a more cautious stance compared to previous plans, as several already announced store openings have been canceled. This is, however, justified, considering the company’s earnings challenges.
In terms of operating profit, Dollarstore has always trailed Tokmanni. In 2023, Dollarstore’s profitability was approximately 4%, while for Tokmanni it was around 7%.
This is starting to drift a bit into the “personal experience” category. But as I understand it, the change process at Dollarstore has already been going on for a while. Out of curiosity, I went to check the situation at a Dollarstore, and I thought to myself, “what is the logic here?” Previously at Dollarstore, items were displayed attractively; now they are perhaps crammed in there Tokmanni-style. There weren’t really many discounts at Dollarstore before, as everything was already affordable, but now they were visible. I’m not quite sure if the discounts are still clearance sales or a more permanent part of the concept? The shop was quiet—only 2 other customers besides myself.
I understand Tokmanni’s logic in trying to increase the average basket value, but what kind of store is Dollarstore now? Why should one go there? Previously, people at least went there for cheap toothpaste and soap.
But to keep from going completely off-topic, it feels like things are still a bit of a mess at Dollarstore. The average purchase price might rise, but why go there? Hopefully, they can get it working, though. It might be hard to revert to the old style after this change. On the other hand, they could have kept the same product volumes and just added higher price point products.
A previous article stated: “Arimo says that the company has had very challenging times in the Swedish market and a lot has had to be invested there. Operations have been changed, management has been replaced, and according to him, it always takes time before changes start to take effect.” This begs the question: where did these very challenging times come from? Was there something in Dollarstore’s own operations that caused the challenging times—or are the challenging times due to the change in concept?