Release Date: October 24, 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) successfully defended its market leadership position in Finland's consumer electronics sector.
- The company achieved significant growth in its own brand sales, increasing by 53% and reaching a record internal share of sales over 8%.
- B2B segment showed resilience with a 1% growth, indicating a slight recovery in this line of business.
- Fast delivery services have expanded significantly, with sales from fast deliveries growing by 34% in the third quarter.
- The company's inventory levels are healthier than in previous years, with a significant reduction in inventory levels by over EUR5 million compared to the previous year.
Negative Points
- Consumer confidence in Finland has declined, negatively impacting discretionary shopping and purchasing decisions.
- The overall consumer electronics market in Finland dropped by over 4%, affecting Verkkokauppa.com Oyj's sales.
- Gross margin experienced a significant drop compared to previous quarters, impacting the company's gross profit.
- Operating result was below the previous year's level, with comparable EBIT at minus EUR0.7 million.
- The market recovery is postponed, with no major changes expected in consumer confidence or economic conditions in the near term.
Q & A Highlights
Q: How has the consumer confidence trend impacted Verkkokauppa.com's business?
A: Panu Porkka, CEO, explained that consumer confidence in Finland has weakened, affecting discretionary shopping and purchasing decisions. This decline has a direct impact on their business, particularly in the consumer electronics market, where heavy price competition is prevalent.
Q: What were the key financial highlights for Verkkokauppa.com in Q3 2024?
A: The company experienced a 3% revenue decline, with online business revenue close to previous year levels, only down by 2%. The B2B segment saw a 1% growth. However, there was a significant drop in gross margin due to negative margins in certain categories, especially seasonal and electric bikes.
Q: How did Verkkokauppa.com manage its inventory levels during the quarter?
A: The company took active measures to improve inventory turnover, resulting in a reduction of inventory levels by over EUR5 million from the second to the third quarter, and a 9% drop compared to the previous year. This has prepared them well for the upcoming season.
Q: What strategic initiatives is Verkkokauppa.com focusing on for growth?
A: The company is accelerating online transition through fast deliveries, with a significant increase in sales from fast deliveries. They are also exploring new markets and partnerships outside Finland, particularly in the Nordics, to distribute their own brands.
Q: What is the outlook for the rest of the year and beyond?
A: The market recovery is expected to be postponed, with no major changes anticipated this year. The company is preparing for intense price competition during Black Friday and the holiday season. They have updated their guidance, expecting revenue and comparable EBIT to be below the previous year.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
