Verkkokauppa.com INSIDE INFORMATION 23 March 2022 at 22:00pm EET
Profit warning: Verkkokauppa.com's consumer business quieter than expected – the company lowers its financial guidance for 2022
Verkkokauppa.com's business environment has been challenging at the beginning of the year. The key factors are the slowdown in consumer demand that has accelerated following the Russian military attack on Ukraine as well as the halving of the export business as a consequence of the Ukraine crisis. In the light of these changes in the operating environment and demand, we estimate that the company's revenue and, consequently, the operating profit will fall short of previously estimated expectations.
The expected slowdown in economic growth and the acceleration of inflation have further weakened households' confidence in their own economies. As a result, consumer demand and business have been quieter than expected during the early part of the year. In line with Etla’s (Research Institute of the Finnish Economy) research, we expect that the growth in private consumption and demand for durable goods to slow down during the year.
As at the beginning of the year, we expected the export business to gradually recover. Following the Russian military attack on Ukraine, the company made the decision to stop all sales to Russia and we do not expect that the export business to recover during the year 2022. In 2021, the export business accounted for approximately 7 per cent of the company's turnover, with Russia accounting for approximately half of this.
We expect the component shortages and product availability challenges that began last year to continue. The effects of the Ukraine crisis may extend to the company’s business throughout the supply chain in the future. In a challenging operating environment, we focus in our business on profitable sales, inventory optimization and cost control.
New guidance for 2022:
The company expects the revenue to be between EUR 530–590 million (in 2021: EUR 574.5 million) and adjusted operating profit (adjusted EBIT) to be between EUR 12–19 million (in 2021: EUR 20.4 million) in 2022.
The financial guidance includes the acquisition of the e-ville.com operations which will close in the beginning of April 2022. The impact of the acquired e-ville.com operations on Verkkokauppa.com are estimated to be of EUR 5-8 million on Verkkokauppa.com’s revenue in 2022. The acquired business operations will be consolidated into Verkkokauppa.com’s figures from the beginning of the second quarter of 2022.
Previous guidance for 2022, published in connection with the financial statements bulletin on 10 February 2022: The company expects the revenue to be between EUR 590–640 million (in 2021: EUR 574.5 million) and adjusted operating profit (adjusted EBIT) to be between EUR 19–25 million (in 2021: EUR 20.4 million) in 2022.
Verkkokauppa.com will publish its first quarter of 2022 interim results on 28 April 2022.
Panu Porkka, CEO
Marja Mäkinen, Head of Investor Relations and Corporate Communications
Tel. +358 40 671 2999
Verkkokauppa.com empowers its customers to follow their passion by providing a wide product assortment of around 80,000 products. Verkkokauppa.com Oyj serves its retail and corporate customers through its webstore, megastores, 24h kiosk and network of collection points as well as fast deliveries and various services. As Finland’s most popular and most visited domestic online retailer, its deliveries cover around 75 percent of the Finnish population within the next day. The Company has four megastores: in Oulu, Pirkkala, Raisio, and Helsinki, where its headquarters is also located. Verkkokauppa.com employs more than 750 people and its shares are listed on the Nasdaq Helsinki stock exchange with the ticker VERK.