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 half-year financial report published on 18 July 2024.

CEO Panu Porkka:

The operating environment remained challenging in the second quarter. Consumer confidence was low, and consumers postponed their purchasing decisions for discretionary products such as home electronics. Due to subdued demand, market development was also driven by very price-driven campaigning.

Verkkokauppa.com's second-quarter revenue was EUR 105.5 million (112.8) and declined by 6 percent year-on-year. Sales development was weak; seasonal sales started slowly and were weaker than expected. Despite low demand, the company’s strategic growth drivers – online sales and own-brand sales, fared better than average.

Low sales volumes, on the one hand, and intense price competition and campaign-oriented seasonal sales, on the other, weakened the company's results. In the low-demand market, we made the pricing decisions necessary to ensure seasonal products and inventory turnover. The gross margin for the quarter was 16.4 percent (16.7%). In addition, cost inflation eroded the positive impact of the efficiency measures taken, and the company's comparable operating result (EBIT) was EUR -1.7 million (EUR 1.0 million) and -1.6 percent of revenue (0.8%).

We continued determinedly to execute our strategy and strengthen our market position to accelerate the online transition. In June, we reached a significant milestone as we extended one-hour deliveries to be available in the areas of our all stores, for more than 1.7 million customers. The share of fast deliveries continues to grow, and already more than a quarter of all online orders are delivered within an hour.

In a challenging operating environment, we focus also on short-term measures to improve operational efficiency and adjust costs to the prevailing demand situation. At the same time, we are promoting the progress of strategic growth projects to grow our current business and strengthen our position as a forerunner in e-commerce. The recovery of the economy and the market has been slower than expected, and we have updated our financial guidance for 2024.