Finnish discount chain Tokmanni released its third-quarter business review on Friday. The report contained a profit warning for investors. The company now expects annual revenue between 1.71 and 1.75 billion euros. Its comparable operating profit should land between 85 and 95 million euros.
These figures represent a downward revision from previous guidance issued in July. The earlier forecast projected revenue of 1.70 to 1.79 billion euros and operating profit of 85 to 105 million euros.
Tokmanni's July-September revenue grew 4 percent to 432.8 million euros compared to the same period last year. Comparable revenue growth remained modest at just 0.7 percent. More concerning was the comparable operating profit, which dropped from 29.5 million euros to 26.4 million euros year-over-year.
Financial markets received the news poorly. The results fell below analyst expectations according to market observers. One stock market journalist noted the challenging situation had been developing for months. The company issued its first profit warning during the summer months.
The journalist highlighted the substantial gap between current performance and year-end targets. Tokmanni achieved only about 10 million euros in comparable operating profit during the first half. Reaching the lower end of the revised guidance at 85 million euros requires massive improvement in the final quarter.
Analysts expect third-quarter results to resemble last year's comparable period. The company faces intense pressure to deliver during the crucial Christmas shopping season. Success during the final quarter will determine whether Tokmanni meets its annual targets.
The retailer's struggles reflect broader challenges in the Finnish discount retail sector. Competition has intensified significantly in recent years. Fixed costs and debt levels have risen across the industry. Tokmanni's acquisition of Dollarstore in Sweden added complexity to its operations.
Current sales levels cannot support previous profitability according to market analysis. The company generated approximately 100 million euros in operating profit with 1 billion euros in revenue during the early 2020s. Today's revenue approaches 1.7 billion euros, yet achieving similar profit levels appears increasingly difficult.
The Finnish discount market faces structural changes that affect all players. Consumer spending patterns have shifted post-pandemic. Inflationary pressures squeeze margins throughout the retail sector. International competitors continue entering the Nordic market.
Tokmanni's situation illustrates how even established discount retailers face adaptation challenges. The company must increase sales substantially to restore previous profitability levels. Market conditions demand strategic adjustments beyond simple cost control.
What does this mean for Finnish consumers? They benefit from intense competition through lower prices. But sustained retail sector struggles could eventually reduce choice and service quality. The coming Christmas season will prove crucial for Tokmanni's turnaround efforts.