Release Date: July 18, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Verkkokauppa.com Oyj (OHEL:VERK, Financial) slightly increased its market share in the Finnish consumer electronics market despite challenging conditions.
- The company's own brands performed well, with a 12% increase in sales, achieving a record high internal share of sales at 8% of total revenue.
- Fast delivery services have been expanded, now reaching 1.7 million Finnish customers within one hour, enhancing customer loyalty and sales.
- The company has successfully integrated AI and dynamic pricing tools to optimize product offerings and protect margins in selected categories.
- Operations have expanded into Estonia, offering over 10,000 SKUs to a significant customer base, potentially opening new growth and profitability streams.
Negative Points
- Overall revenue declined by 6% due to low consumer confidence and unfavorable conditions for discretionary shopping.
- Margins were negatively impacted by heavy price competition and increased logistics costs, including container expenses.
- Personnel costs have increased due to collective agreements affecting salary levels in Finland.
- The company reported a negative result of EUR 1.7 million compared to a positive result of EUR 1 million in the previous year.
- Market recovery has been postponed, with expectations of a slower and milder recovery than initially anticipated, affecting revenue and profit forecasts.
Q & A Highlights
Q: How has the operating environment impacted Verkkokauppa.com's performance in Q2?
A: Panu Porkka, CEO, explained that the operating environment remained challenging with low consumer confidence and hesitancy in discretionary spending. Despite these conditions, Verkkokauppa.com managed to slightly increase its market share, although overall revenue declined by 6%.
Q: What were the main factors affecting margins during the quarter?
A: CEO Panu Porkka noted that heavy price competition in the consumer electronics market and increased logistics costs, particularly in container expenses, negatively impacted margins. However, the company implemented dynamic pricing tools and focused on higher-margin own brands to mitigate these effects.
Q: Can you elaborate on the strategic initiatives and their progress?
A: Panu Porkka highlighted the acceleration of the online shift through fast deliveries, with all stores now connected to a network offering one-hour delivery to 1.7 million Finnish customers. The company also expanded operations to Estonia and enhanced its trade-in services.
Q: How did Verkkokauppa.com's own brands perform during the quarter?
A: The CEO reported a 12% increase in sales from own brands, achieving a record high internal sales share of 8%. This performance is ahead of the company's target to reach a 10% share by 2028.
Q: What is the outlook for the remainder of the year?
A: Panu Porkka indicated that the market recovery is expected to be slower and later than anticipated. Consequently, the company revised its guidance, expecting revenue and comparable operating profit to be below the previous year's levels unless there is a positive market turn.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
