CEO's review

The CEO's review is updated quarterly in connection with the publication of the financial results. This review is from Verkkokauppa.com's interim report published on 6 February 2025.

CEO Panu Porkka:

Operating environment remained challenging in the fourth quarter of the year. Consumer confidence remained low dampening the private consumption. Consumers were still cautious about purchasing discretionary products. Competition in the consumer electronics market continued to be price-driven, and there were no signs of a replacement cycle starting.

The fourth quarter revenue was 140.2 million euros (150.6 million euros), down by 7 percent from the previous year. The revenue was weighed down by weak demand, particularly in discretionary categories such as televisions, gaming, and phones. Consumers were cautious in their purchasing decisions, while the development in B2B
sales was more stable. Strategically important own brands’ revenue grew by 20 percent and represented 7 percent of the revenue.

Despite the weak demand environment, the company succeeded in improving profitability in the fourth quarter. Gross margin improved to 16.6 percent (15.3%). The margin was strengthened by improved purchase terms related to preparations for season sales, healthy inventory levels at the start of the fourth quarter and a successful pricing strategy. Comparable fixed costs decreased by 9 percent from the previous year. Successful cost efficiency measures lay a solid foundation for the company once the market situation improves. Comparable operating profit improved significantly to 3.8 million euros (1.6 million euros) and was 2.7 percent (1.1%) of revenue. The full year comparable operating profit was 1.8 million euros (6.1 million euros), or 0.4 percent (1.2%) of revenue.

The company's financial position provides a solid base for executing its strategy. Due to successful inventory management, the value of inventory was reduced by 18 percent compared to the previous year. Operating cash flow strengthened and was 21.1 million euros (17.8 million euros) for the quarter. This led to a strong cash position at the end of the year.

At the core of our strategy is accelerating the shift to online commerce, primarily through the fastest deliveries in the market. The fourth quarter displayed strong growth in one-hour deliveries, reaching a milestone of 100,000 cumulative deliveries. The company is Finland's sole operator able to serve 1.7 million consumers within an hour. The share of all fast deliveries of online sales continued to grow reaching 16 percent in the fourth quarter. Customer satisfaction of one-hour deliveries remained very high, NPS was 82 during the fourth quarter.