Earnings call transcript: Puuilo Oyj Q2 2025 shows strong growth and market optimism

Puuilo Oyj reported a robust second quarter for 2025, with net sales reaching €136 million, marking a 13.2% increase year-over-year. Earnings per share (EPS) rose to €0.33, up from €0.28 in the previous year. The Finnish retail company saw its stock price surge by 10.78%, reflecting investor confidence in its growth trajectory. The company’s focus on expanding its private label offerings and opening new stores contributed to this performance, with a notable increase in customer traffic and market share.

Key Takeaways

• Puuilo Oyj achieved a 13.2% increase in net sales for Q2 2025.
• EPS improved to €0.33, surpassing the previous year’s €0.28.
• The stock price increased by 10.78% following the earnings announcement.
• The company launched nearly 1,000 new private label products.
• Plans for international expansion into Sweden are underway.

Company Performance

Looking ahead, Puuilo Oyj has set ambitious targets for 2025, forecasting net sales between €425 million and €455 million and adjusted EBITDA between €70 million and €80 million. The company aims to increase its store count to over 90 by 2030 and expand internationally, particularly into Sweden. Long-term goals include achieving over €800 million in net sales and an adjusted EBITDA margin exceeding 17%. For deeper insights into Puuilo’s growth potential and comprehensive financial analysis, investors can access the detailed Pro Research Report available exclusively on InvestingPro, which covers over 1,400 top stocks with expert analysis and actionable intelligence. For deeper insights into Puuilo’s growth potential and comprehensive financial analysis, investors can access the detailed Pro Research Report available exclusively on InvestingPro, which covers over 1,400 top stocks with expert analysis and actionable intelligence.

Financial Highlights

• Revenue: €136 million, up 13.2% year-over-year
• Earnings per share: €0.33, compared to €0.28 in the previous year
• Gross margin: 38.2%, an increase of 0.6 percentage points
• Adjusted EBITDA: €28.2 million, up 13.7%

Market Reaction

Looking ahead, Puuilo Oyj has set ambitious targets for 2025, forecasting net sales between €425 million and €455 million and adjusted EBITDA between €70 million and €80 million. The company aims to increase its store count to over 90 by 2030 and expand internationally, particularly into Sweden. Long-term goals include achieving over €800 million in net sales and an adjusted EBITDA margin exceeding 17%. For deeper insights into Puuilo’s growth potential and comprehensive financial analysis, investors can access the detailed Pro Research Report available exclusively on InvestingPro, which covers over 1,400 top stocks with expert analysis and actionable intelligence.

Outlook & Guidance

Looking ahead, Puuilo Oyj has set ambitious targets for 2025, forecasting net sales between €425 million and €455 million and adjusted EBITDA between €70 million and €80 million. The company aims to increase its store count to over 90 by 2030 and expand internationally, particularly into Sweden. Long-term goals include achieving over €800 million in net sales and an adjusted EBITDA margin exceeding 17%.

Executive Commentary

CEO Juha Saarela emphasized the company’s unique market position, stating, "Our concept is different. Our core assortment is broader and deeper compared to others." CFO Ville Ranta highlighted the company’s financial focus, noting, "Stocks follow earnings by the end of the day." Saarela also expressed confidence in the company’s international plans, saying, "We can wait that we can deliver very good profitability in Sweden also."

Risks and Challenges

• Economic uncertainty may impact consumer spending patterns.
• Expansion into new markets, such as Sweden, carries inherent risks.
• Supply chain disruptions could affect inventory and sales.
• Competition in the retail sector remains intense.
• Achieving long-term sales and margin targets may require significant investment.

Q&A

During the earnings call, analysts inquired about the company’s expansion strategy and its approach to entering the Swedish market. Executives confirmed an organic growth strategy and minimal changes expected for the Swedish entry. Questions also focused on potential mergers and acquisitions, with management indicating openness to future opportunities if they align with strategic goals.

Full transcript - Puuilo Oyj (PUUILO) Q2 2025:

Juha Saarela, CEO, Puuilo Oyj: Hello and welcome. Thank you for attending Puuilo Oyj’s half-year results presentation covering the period ending in July. In this same presentation, we will also share our updated strategy and new long-term financing targets. I am Juha Saarela, CEO of Puuilo Oyj, and joining me in this presentation is Puuilo Oyj CFO, Ville Ranta. In the half-year report, we will go through the key results of the second quarter and H1, that is the period from May to July, and the first half of the financial year. After this presentation, you can ask questions by calling the line. We are happy to answer your questions. Here is the agenda for the presentation. First, I will present the key figures and events of the second quarter and the first half of the financial year. Following that, Ville will provide a more detailed overview of the financial development during the same period.

The third item on the agenda covers the outlook for the current financial year, including the forecast range for both net sales and adjusted EBITDA. We will move on to point four, which presents our updated growth strategy and new long-term financial targets for the strategy period. As I mentioned, we have reserved time for questions at the end. Our second quarter covers the period from May to the end of July, and here you can see the key results. First, net sales. Net sales for the quarter were almost €136 million, showing strong growth compared to the same period last year. Total growth was over 13%, and like-for-like growth was 1.3%. The increase in customer traffic continued to be the main driver of sales growth, and the sales increased in both old and new stores. Net sales grew in all months of the second quarter.

The average basket size was slightly lower than in the comparison period, but the rate of decline slowed down. Profitability. Gross margin in Q2 increased and was 38.2%, up by 0.6 percentage points compared to the same period last year. The improvement in gross margin was mainly driven by increased sales of private label products and a continued shift in the sales mix toward more affordable goods. Adjusted EBITDA in the second quarter grew by nearly 14% and amounted to €28.2 million, representing 20.8% of net sales. This was an increase of approximately €3.4 million, and relative profitability remained at the same level as in the comparison period. Earnings per share were €0.25 compared to €0.22 in the comparison period. We continued our strategic expansion by opening new stores in Mäntsälä and Jyväskylä during Q2. At the end of the period, we had 54 stores.

Let’s look at the first half of the year from February to the end of July. First, net sales. Net sales for the period were €225 million, growing by approximately €30 million compared to the same period last year. Growth was over 15%, and like-for-like growth was 3.4%. The main driver of sales growth was the increase in customer traffic, which continued to increase in both old and new stores. Net sales increased in all months of the period. The average basket size was slightly lower than in the comparison period, but the rate of decline slowed it down. Gross margin for the first half of the year increased and was 37.7%, up by 0.5 percentage points compared to the same period last year.

The improvement in gross margin was mainly driven by increased sales of private label products and the continued shift in the sales mix towards more affordable goods. Adjusted EBITDA for the first half grew by over 18% and amounted to €39 million, which is 17.3% of net sales. This was an increase of approximately €6 million, and relative profitability grew by 0.4 percentage points compared to the comparison period. Earnings per share were €0.33 compared to €0.28 in the comparison period. We continued our expansion, and we opened five new stores during the period in Varkaus, Savonlinna, Lohja, Mäntsälä, and Jyväskylä. At the end of the period, we operated a total of 54 stores. The performance and results for the first half of the year were good, considering the general economic situation.

Customers’ cautious spending and frugality, as well as a relatively high unemployment rate, continue to be reflected in purchasing behavior. However, customer traffic at Puuilo continues to grow, which is the most important metric to measure the relevance and attractiveness of our assortment, price level, and overall concept. We have gained market share despite the weak economic situation and intensified competition. There are now some signals of the economic recovery, and we also believe that customer confidence will slowly begin to improve. It is the effect on the real economy, and purchasing behavior always comes with a delay, something to wait for. Overall, the first half of the year was good, and we have reason to expect that the end of the financial year will also be favorable. We continue our profitable growth with confidence. Good. Now, Ville, it’s your turn, please.

Ville Ranta, CFO, Puuilo Oyj: Thanks, Juha. The second quarter net sales were €135.8 million, up by 13.2% compared to the last year. At the same time, like-for-like net sales grew by 1.3%. Customer traffic in our stores grew by 14.6% and 2.8% in like-for-like terms. The average basket size decreased slightly in Q2, but the rate of the decrease slowed down. The growth in customer traffic continued, and this is a very important metric for us. In Q2, we opened two new stores in Mäntsälä and in the Jyväskylä Keljo, which is the second store in Jyväskylä city. The new store openings have been successful. Cumulatively, the financial year is now exactly halfway, and at the end of H1, we had net sales of €225 million. The growth in the company’s net sales was 15.2% and a good level of 3.4% in like-for-like terms.

Cumulatively, customer traffic increased by 16.1% in all stores and 4.6% in like-for-like terms, which we are pleased with. As Juha already mentioned earlier, a total of five new stores were opened during H1. Let’s move on to the gross margin. In Q2, Puuilo’s gross margin was 38.2% of net sales, and it grew by 0.6 percentage points compared to the corresponding period of the previous year. The increase in the gross margin level was influenced by the sales mix and the increase in the share of owned private label products in net sales. Sales growth in owned private label products was again strong, growing by 22%. Owned private label products are the main factor for the good margin development in Q2. Cumulatively, Puuilo’s gross margin was 37.7% at the end of H1, growing by 0.5 percentage points compared to the last year.

The same factor is behind this, that owned private label products are continuously increasing their share of the company’s net sales and bringing us better margins. Cumulatively, sales growth in owned private label products was 28%. Compared to the previous year, we have launched almost 1,000 new product articles in the assortment of our owned private label products. The increase in the gross margin level was therefore continued, and we are very pleased with this. Let’s move on to profitability. Adjusted EBITDA for Q2 was €28.2 million, up by €3.4 million compared to the last year. Adjusted EBITDA grew by 13.7% in percentage terms, and profitability as a percentage of net sales was 20.8%. Better profitability than the previous year in both euros and percentage terms. Cumulatively, adjusted EBITDA was €39 million at the end of H1, and relative profitability was at the level of 17.3%.

Compared to the previous year, adjusted EBITDA grew by €6 million and in percentage terms by over 18%. Relative profitability improved by 0.4 percentage points. The improved profitability is driven by good sales development, increased gross margin, and cost discipline. Operating expenses were cumulatively 16.1% of net sales, and the expense ratio decreased compared to the previous year. As a result of these factors, profitability improved. I could summarize here that all performance indicators were at good level and developed in the right direction. This graph shows the development of Puuilo Oyj’s inventory levels over the last three half years. The inventory turnover rate slowed down, which is due to the initial inventories of eight new stores and the increase in the import of our owned private label products.

Sales of our owned private label products have grown strongly, which is reflected in the value of the inventory due to the longer delivery cycles. However, our owned private label products are a winning strategy for us in terms of profitability. However, we are constantly working on these to speed up the delivery cycles and improve purchasing terms. We actively monitor the inventory turnover rate, and the long-term trend goal is to improve turnover rate. However, in the short term, there might be fluctuations between quarters and years for the reasons mentioned above. In Q2, Puuilo Oyj’s operating free cash flow was €38.1 million and an increase of €6.5 million. The cash flow was driven by good net sales development and, of course, good profitability, as well as positive change in working capital. We have been able to improve purchasing terms, which is natural when volumes are increasing.

This is now reflected in the reported cash flow. Cumulatively, the operating free cash flow was almost €52 million, which was very strong. The growth compared to the same period last year was almost €18 million. Strong cash flow, which we are happy with. The company’s net debt to adjusted EBITDA ratio decreased slightly compared to the comparison period due to strong EBITDA development. The current net debt to adjusted EBITDA ratio is in line with our long-term goals. The middle figure shows the adjusted net debt to EBITDA ratio graph excluding the impact of IFRS 16, which decreased compared to the previous financial year. The key figure calculated excluding the impact of IFRS 16 is currently very low. According to this figure, it could be stated that the company is low levered.

Puuilo’s cash and cash equivalents were €42.5 million at the end of the quarter, and the company’s financial position is healthy. Puuilo’s net debt excluding the impact of IFRS 16, meaning the net sum of cash and cash equivalents and bank loans, was €17.4 million at the end of July. This also means that the company’s absolute net debt is low. Puuilo made a financing agreement in the spring of 2025, in which the company was raised an additional €10 million in long-term bank loans. The second part of the €10 million will be withdrawn in October, when the €20 million increase on top of the old loan under the financing agreement has been fully withdrawn. Here are the figures as a summary, which we already went through in detail. We are very pleased with the performance of the company.

Juha will tell you about the outlook for the financial year 2025. Please, Juha.

Juha Saarela, CEO, Puuilo Oyj: Thank you, Ville. The outlook for this financial year: we repeat the outlook for this year. We forecast that net sales will grow and be between €425 million to €455 million. We also expect adjusted EBITDA to be between €70 million to €80 million. There are uncertainties related to the outlook, such as the development of the still uncertain general economic situation, in addition to changes in purchasing power and consumer behavior. Additionally, there are other unusual uncertainties in the outlook, such as the ongoing war in Ukraine, but also other potential geopolitical crises or international tensions that may have a direct or indirect impact, especially on the availability and price of goods, which can affect sales and profitability. We opened five new stores during the first half of the year.

The ramp-up of these stores has followed the same pattern as previous openings, and all have performed in line with our expectations. Expansion will continue in the second half of the year, in line with our strategy. We expect to open a total of seven stores this year. Later, this autumn, we will open a store in Iisalmi, and before the end of the financial year, another one in Heinola. For next year, we have already announced two new stores: a second store in Espoo and one in Hollola. In addition, early next autumn, we will relocate our Vantaa store to a new and attractive location in the Tammisto commercial area in Vantaa. Looking ahead to next year overall, we expect to open several new stores in line with the updated growth strategy published today. Next, we will present our updated strategy and new long-term financial targets.

Here you can see the agenda for this presentation. I start with a brief overview of Puuilo’s history, and then, together with Ville, we work through the key elements of the strategy and explain how we plan to reach the new targets. The third section covers our capital allocation principles, and at the end, we have reserved time for questions about both the updated strategy and the half-year reports. A brief overview of Puuilo’s history, which is a truly unique success story. Puuilo was founded in 1982. In its early days, the company sold wooden toys and souvenirs from a small workshop. The name Puuilo originated from this. In the late 1980s, many Finnish import companies began sourcing affordable products from Asia, which were in high demand. This opened up a new market for discount retail.

To meet this growing demand, Puuilo acquired used buses and converted them into mobile stores. At its peak, six buses drove market squares, particularly in northern and eastern Finland. Over time, the bus business environment evolved, and by the late 1990s, the popularity of bus-based retail began to decline. In 1998, Puuilo opened its first physical store in Kajaani, and this continued its bus sales operations. By 2006, Puuilo had four stores, one of which was located in Vantaa, the capital area. In 2008, the company launched its online store. In 2015, Puuilo was acquired by a new private equity investor. At the same time, a new management team and strategy were introduced, aimed at accelerating profitable growth. By 2020, Puuilo had already expanded to 30 stores. Significant investments were made in IT systems, organizational structures, and logistics to support the successful execution of the strategy.

In 2021, Puuilo was listed on the Helsinki Stock Exchange, gaining over 33,000 new shareholders, a record number in the history of initial public offerings on the Helsinki Stock Exchange. By the end of 2024, Puuilo had approximately 50 stores and nearly €340 million in net sales, while delivering industry-leading profitability. Puuilo’s current market capitalization is approximately €1.1 billion. Good. Here is our new strategy for 2026 to 2030, which includes some adjustments compared to the previous strategy. It remains a simple, clear, and highly actionable strategy. The six key elements of our strategy are: the first one, opening new stores and continuing our expansion in Finland. Our target for this period is to reach over 90 stores nationwide. Second, entering the international market and starting it with a pilot in Sweden. Third, continuing like-for-like sales growth, where there is still significant potential.

Next, strengthening our current position by increasing private label sales and being one of the most cost-efficient operators in the industry. Fifth, providing an omnichannel customer experience. A shopping experience that is easy, affordable, and fast is a key factor for both current and potential customers. Sustainability work and its development, we call this theme a responsible retailer, which covers the key elements of our sustainability efforts. Working towards these six objectives will support us in achieving our new long-term financial targets presented in the lower half of the page. Our sales growth target is to achieve an annual sales growth of over 10%. By the end of the strategy period, we aim to exceed €800 million in net sales. In terms of profitability, our target is to reach an adjusted EBITDA margin over 17%, corresponding to more than €136 million in adjusted EBITDA.

We aim to distribute at least 80% of the company’s net results to shareholders. Regarding the net debt, our target is to keep the ratio of net debt to adjusted EBITDA below 2.5 times. Good. Next, a few words about the expansion of our store network. We will continue expanding in Finland with our current concept, aiming to grow the chain to over 90 stores. Currently, we have 54 stores open, and if everything goes according to plan, the number will reach 56 by the end of the financial year. By the opening of seven to ten new stores annually during the strategy period, we aim to reach our goal of more than 100 stores by the end of 2030. This total includes both Finland and Sweden. Overall, the majority of growth will continue to come from Finland, with new stores in Sweden providing additional support during the strategy period.

This strategy and our approach to internationalization enable us to continue profitable growth in the years ahead. We have already demonstrated this in the past, and our recent performance further highlights that growth companies in this sector can also be highly profitable. We are able to grow profitably especially because we benefit from economies of scale and do not need to increase fixed costs in proportion to sales growth. Another key driver of profitability is our gross margin, which we can further improve, in particular by increasing the share of our owned private label products. Then about international expansion and new markets, we are taking our first steps in the international market, starting with a pilot phase in Sweden. The Swedish market is relatively familiar to us. It is a neighboring country with mostly the same competitors and a similar business environment.

We know our strengths, but also we recognize that our concept may require some fine-tuning in a new market. We do not underestimate the competitive landscape, and we are aware of the challenges. However, we believe that our assortment, pricing, and overall concept will work well also in Sweden. Our first priority is to ensure competitiveness in this new market. Only after that may it become relevant to consider expansion into other countries. The pilot phase in Sweden will be given the time it needs before any further decisions are made. About our unique concept, our sales growth has consistently been the fastest in the industry year after year. At the same time, new competitors have entered the Finnish market, and existing players have continued to expand. Despite this, our growth, expansion, and profitability have remained best-in-class compared to competitors. The reason is simple: our concept is different.

Our core assortment is broader and deeper compared to others. Customers can trust they will find what they are looking for with us. Our stores offer specialty items, branded products, and private label products, providing multiple options to meet diverse customer needs. Our pricing is consistently low and not based on campaigns or bargains. We offer reliable, affordable prices. Because our customers are busy and their time is valuable, ease of shopping is a key factor in choosing where to shop. We provide shelf location and availability information for nearly all products in our assortment. Clear store layouts make shopping fast. Products are easy to find and quick to pay for. These cornerstones of our concept create a competitive advantage that drives customer traffic growth, the most important metric in this business. Next, the growth potential of our like-for-like sales.

We currently operate 54 stores, and more than half of them are less than five years old. New stores typically grow faster than older ones. Given that a significant portion of our store network consists of these younger stores, it is entirely reasonable to expect our like-for-like sales to grow faster than the average market growth. This growth is also supported by additional drivers, such as increased brand awareness, improved store appeal, enhanced shopping convenience, and better product availability, just to name a few. Good. Ville will continue by discussing the drivers behind our profitability.

Ville Ranta, CFO, Puuilo Oyj: Thanks, Juha. All of our stores are profitable, very profitable, in fact. The graph on the left side shows the profitability of our stores expressed as a Finnish accounting standard’s EBITDA percentage, which means that it also includes rents. Our most profitable stores reach Finnish accounting standard’s EBITDA of well over 25%, and even the lowest level is over 15%. Notably, the stores at lower profitability are either new or young stores that are still in the process of ramp-up. We see that in the future, as the maturity of the store network increases, more and more stores will improve profitability throughout scaling, which in turn directly affects the profitability of the entire company. In addition, we have tools to further increase unit-specific profitability, for example, throughout improving workshops planning, and of course, throughout an increase in gross margin.

On the right-hand side, you can see the increase in the new stores’ Finnish accounting standard’s EBITDA profitability from the opening months onwards. On average, a new store is profitable in two months or less. This is based on a strong increase in sales, which starts from the opening day. Our store concept scales up to be profitable in a short time, and the increase in profitability continues with the increase in sales, resulting in scaling of fixed costs. From the point of view of cash flow, the new store requires a total initial investment of approximately €1.8 million, which includes store equipment and starting inventory. Calculated throughout EBITDA, the payback period for the new store is roughly 19 months, which is very fast. Puuilo Oyj’s gross margin is not particularly high and is even slightly lower compared to some of our key competitors.

This is good to note because we clearly have room for improvement here. Increasing gross margin naturally leads to a higher profitability. Puuilo Oyj’s gross margin has been rising in a trend-like manner for several years in a row. The main driver of the increase in gross margin is the private label strategy, which we have been doing for over 13 years now. The number of private labels is growing year by year, and their share of total net sales in the previous 12 months was 23%. The share is growing year by year, as can be seen in the graph at the bottom left. Private label products have a better gross margin. They help us differentiate ourselves, protect ourselves from price competition, and improve customer loyalty. We have increased the number of private label products consistently.

Our goal is to increase the share of private label products to 35% of total net sales in the long term. On the right side, you can see examples of Puuilo’s own private label products, and next to them, examples of well-known brands that we also sell. Private label products are almost always cheaper for a customer. In addition, the gross margin of a private label product can be many times higher than a branded product. Of course, this varies depending on the product. We have very strong expertise in private labels, and our logistical capabilities have been developed to improve this important strategy for us. Juha, please.

Juha Saarela, CEO, Puuilo Oyj: Retailers must serve and engage with their customers in the same way, using a consistent style, brand, voice, and image frequently and across multiple channels. The shopping journey typically begins when a customer sees or hears an ad on the radio, television, direct mail, or social media. Alternatively, the customer may have a specific need and remember that we offer certain goods. Before visiting a store, a customer can check product availability, pricing, and shelf location online for their preferred store. Once in the store, products are easy to find, and the customer proceeds to check out and leave. If assistance is needed, our staff are available to help. When the shopping experience is smooth and effortless, customers are more likely to return, and customer loyalty increases. Our marketing is different and stands out. Our store network is broad and still expanding. Our web store functions well.

Availability and shelf location information for all products is available online. Store layouts are easy to navigate, and store staff are available when needed. A few words about our sustainability strategy. This was not updated in this round. In our strategy, sustainability is defined as a separate theme under a responsible retailer. The three main focus areas of our sustainability work are supply chain, a good workplace, and environmental and social responsibility. Each of these includes several key subtopics, such as value chain, employees, working conditions and employment relationships, operational emissions, and, for example, data security. We have made progress in nearly all areas, but there is still plenty of work ahead. We understand that we are still in the early stages of our sustainability journey, but we are on the right path and moving forward. This was a brief summary.

More detailed information is available in the CSRD compliant sustainability report, which is published alongside the financial statements. Good. Now it’s really your turn again.

Ville Ranta, CFO, Puuilo Oyj: Thanks, Juha. Next, we will take a closer look at the financial indicators for our new strategy period. The first is the development of net sales. The annual net sales growth rate target is over 10% per year. According to our forecast, with this growth rate of over 10%, we will reach the net sales of over €800 million by the end of the financial year 2030. The key drivers behind this are the increase in the number of stores towards the stated 100 stores. In addition, there is a like-for-like growth, where we still have plenty of potential thanks to our young store network. We still see significant geographical expansion potential in Finland, which means opening more stores in large cities as well as smaller towns and municipalities.

We already have experience with several of these types of stores, and we have been positively surprised by the sales levels, for example, in municipalities with fewer than 20,000 inhabitants. This opens up even more growth opportunities for the future. In addition, international expansion will bring us net sales growth during the strategy period. If we look at the components, like-for-like growth continues with the help of the young store network, which I already mentioned. In addition, we are slightly accelerating the annual phase of the new store openings to be between seven and ten new stores. In fact, in the last two years, we have opened seven new stores per year. The figure also includes stores opened abroad, which is why we are talking about the range here. The growth drivers described above then lead to the third factor, namely the absolute growth of adjusted EBITDA.

Profitability is improved by our own private label strategy, the growth in the number of stores, and the scaling of profitability here, there, as well as the continuous cost discipline at the company level, which we have successfully maintained for years. This is also supported by the company’s strong culture and simple structure. With these actions, we look towards year 2030. Let’s end this series of numbers with some facts. Net sales have continued to grow strongly after the corona pandemic. What is significant is that the sales growth comes from both old and new stores, meaning that the background is, of course, the expansion of our store network, but also like-for-like growth, which is important to us. The rolling net sales of the last 12 months has already well exceeded the €400 million milestone. The development of the gross margin has also been good.

We have been able to maintain our good gross margin level all these years. These years include the global logistics challenges caused by the pandemic, the rapid acceleration of the inflation, and consumer uncertainty. Despite these factors, our gross margin level has continued to grow. Our private label strategy already mentioned above has a strong influence on this background, which leverages the gross margin upwards year after year. Of course, at the same time, the changes in the company’s sales mix have also increased our gross margin level as demand shifted to lower-priced goods after the pandemic years. Adjusted EBITDA growth has also continued, especially in euros, but also relatively. The adjusted EBITDA percentage is already approaching the peak figures after the pandemic years, and we see that this level can be maintained or even improved from these figures in the future.

Our long-term target for the relative profitability is over 17%. As the company’s net sales grow, it’s scaling itself to become more and more profitable. However, the international expansion plans we described above require investments in the front line, especially in the beginning, which is why we are aiming for the stated profitability target. However, the company’s earnings in absolute terms will be growing in the future. Last but not least, our cash flow, where the graph speaks for itself. Puuilo has hundreds of cash machines at the stores, but the entire company could also be called one big cash machine. This is, of course, due to our good sales and profitability development, but also to our very low investment needs, as we do not build our stores on the balance sheet, but lease them.

In addition, our processes for establishing new stores are efficient and require very little capital expenditure. We have quite good evidence of the company’s success, and we intend to continue doing the same in the upcoming strategy period, of course, accelerating growth slightly. Juha will continue from this.

Juha Saarela, CEO, Puuilo Oyj: Next, let’s move on to the efficient use of capital. Puuilo’s capital efficiency creates opportunities to consider additional capital return mechanisms for shareholders. Here is some background on that. These don’t change the previously stated profit distribution policy and targets, but serve as a recap. Primarily, we always invest free capital in our current strategy and growth, ensuring it’s secure. Puuilo’s strong profitability generates solid cash flow, which allows us to finance ongoing expansion, development projects, and increase the share of our imports that tie up working capital. These are always the primary uses of capital. Secondly, we may consider additional capital return mechanisms, such as special dividends, as our efficient and highly profitable operation generates funds beyond what is required for our current growth strategy. Additionally, the company’s net debt to adjusted EBITDA must remain below the strategic target of 2.5 times. Previously, this was 2 times.

This gives us room to expand faster in Finland and in new markets, as store rents are treated as lease liabilities under IFRS 16. Good. Here is a recap of the updated strategy and our financial targets for 2026 to 2030. Thank you. Now we move on to questions. Moderator, please open the line.

Moderator: If you wish to ask a question, please dial pound key five on your telephone keypad to enter the queue. If you wish to withdraw your question, please dial pound key six on your telephone keypad. The next question comes from Maria Wikström from SEB. Please go ahead.

Maria Wikström, Analyst, SEB: Yes. Thank you, Juha, and Ville. I got to say that very good slides work today on the new strategy. I have three questions. The first one is that with your current plans, I mean, when do you think you would be ready to open the first store in Sweden?

Juha Saarela, CEO, Puuilo Oyj: Thank you. We are preparing in all our business units, but we can’t say at the moment when we open the first or first stores in Sweden. We are in the preparing phase.

Maria Wikström, Analyst, SEB: Okay. My second question is, as I mean, you have outstanding returns on invested capital, I mean, compared to many other Nordic retailing peers. Of course, the source is higher margins, but you also don’t operate an own warehouse. Now when you are increasing the scale, my question is that do you think you need to invest more, or do you need to invest in your own warehouse capabilities? Also, if you could at this same mention talk a little bit about the new net debt to adjusted EBITDA target, which was raised from two to two and a half. Where do you see you are going to invest this money if you take more debt in the future?

Juha Saarela, CEO, Puuilo Oyj: Okay. If I ask first about the warehousing and distributor center question, our logistics model here in Finland is very good, and we think that we can copy that to the new market. As you maybe know, we have outsourced our warehousing and transporting to the big logistics company, and almost all the big logistics companies are operating in Nordics also. We can use that same contract in Sweden. As I mentioned, we think that we can copy that. That is one question and thing we need to investigate before we open the first store in Sweden. At the moment, it seems that we can copy the same logistics model to Sweden. Ville, did you get the other question?

Ville Ranta, CFO, Puuilo Oyj: Hi, Maria. I can take the leverage question. Yes, we decided to raise a leverage ratio a bit from the previous strategy, and I think you noticed that it includes the IFRS 16 rent liabilities also. We are preparing to acquire more rent agreements, so there is more headroom for the new rent agreements and accelerated store openings. That’s one reason. It gives us also a possibility to use debt if we see that we need more for the investments or for the capital allocation purposes, like we did this year in a small scale. No any decisions about those yet, we are preparing for expansion mainly, and we wanted to prepare raising a little bit more headroom there.

Maria Wikström, Analyst, SEB: Okay. Finally, on the profitability, you raised the target for your own branded sales from 30% to 35%, whereas this is today’s level of 23%. Previously, this has had a positive impact on your gross margin. Still, you kept the EBITDA margin target at 17%. Can you discuss a bit that, without expansion, would you have increased the EBITDA margin target, or what’s your thinking here?

Ville Ranta, CFO, Puuilo Oyj: Yeah, good question. Of course, the international expansion, like I said in my presentation, that it will require investments or, costs at least in the first phase, and they are coming to us before we get the operations running internationally. That’s the fact. We are communicating that the profitability will be over 17%. I want to highlight here that we are not stating that it will be 17%, but over 17%. We see that the profitability development will continue as the companies will be scaling up in the future also. Here it is good to note that the main of the growth will come from Finland still for this strategy period, where the scaling up should continue like it has continued so far. We believe that we can improve our profitability, but we want to be careful here because there will be some costs coming from the international expansion.

Like Juha said, we are in the beginning of this process, so we are not 100% sure yet how many euros and $0.01 it will be.

Maria Wikström, Analyst, SEB: Okay. Maybe it’s too early to ask that, I mean, the international expansion, how many new headcounts you think you would need in the headquarter operations in order to facilitate the growth in Sweden. I would think that given that you are very lean and mean concept, you probably don’t have all the resources as of now.

Juha Saarela, CEO, Puuilo Oyj: We will do recruiting very carefully. Of course, we need to recruit a new person, which is needed, but we don’t over-resource our expanding to new markets. We do that work very carefully. I think that this is not a big question or problem in the future. Our concept is quite clear, and we can run many, many operations in other markets also from Finland and our current headquarter resources. Of course, there are certain recruitments coming.

Maria Wikström, Analyst, SEB: Okay, perfect. I will let the next one ask questions.

Moderator: The next question comes from Kai Loikkanen from Danske Bank. Please go ahead.

Kai Loikkanen/Kalle/Mika Ihamäki, Analyst, Danske Bank/DNB Carnegie: Hello. Hello, gentlemen. It’s Kalle from Danske Bank. A few questions on my side. First, talking about the first half results or the second quarter, whichever you prefer, I was wondering about the like-for-like growth of the private label sales. Is that a number that you could provide?

Ville Ranta, CFO, Puuilo Oyj: No, no, we are not disclosing the like-for-like numbers for the private label products. We told you the total development number, but that’s all.

Kai Loikkanen/Kalle/Mika Ihamäki, Analyst, Danske Bank/DNB Carnegie: Okay, that’s clear. I was wondering, you mentioned that you will open seven new stores in this financial year. How about the financial year 2026? How many stores in total should we be expecting for that year?

Juha Saarela, CEO, Puuilo Oyj: Yeah, our target is to open seven to ten new stores in coming years. Sometimes it is seven, sometimes it is ten. That is a total number in Finland and Sweden. Sorry.

Kai Loikkanen/Kalle/Mika Ihamäki, Analyst, Danske Bank/DNB Carnegie: Yeah, you don’t want to specify, you know, are we closer to seven or closer to ten likely next year?

Juha Saarela, CEO, Puuilo Oyj: It depends, and there can be changes of our plans because some of the new stores are new buildings. They are the building projects, and sometimes they delay. There are many reasons why this happens. That is why, for example, there are variables between years. If we talk about the next year, 2026, now it seems that we can open at least seven new stores.

Kai Loikkanen/Kalle/Mika Ihamäki, Analyst, Danske Bank/DNB Carnegie: Okay, that’s fair enough. I was wondering about the comments that you said about Sweden. Did I understand correctly that you first opened five new stores in Sweden to see how they go before making decisions on more stores in other countries?

Juha Saarela, CEO, Puuilo Oyj: No, no. We have not done any decisions in other countries than Sweden. We are starting the piloting phase in Sweden during that strategic period, 2026 to 2030. During that, we will open, let’s say, several stores in Sweden. We are not talking about the other markets yet.

Kai Loikkanen/Kalle/Mika Ihamäki, Analyst, Danske Bank/DNB Carnegie: Okay, that’s clear enough. Lastly, on my part, obviously, you had the kind of alternatives to go international, which you now announced today. The other alternative would, of course, have been to continue in Finland, open the 90 stores or even more than that in Finland by 2030, and then focus on margins, perhaps dividend distribution, and so on. I was just wondering about, I mean, you must have thought about both alternatives and then decided on international expansion. What made you kind of tilt towards that decision rather than the yield and dividend kind of alternative?

Ville Ranta, CFO, Puuilo Oyj: If we look at the company valuation or share price perspective, we think that stocks follow earnings by the end of the day. We see that by doing this international expansion and reporting profitable figures internationally, despite the EBITDA percentage, as long as the earnings per share grows, we see that it creates more value than just being a dividend company or growing the business.

Kai Loikkanen/Kalle/Mika Ihamäki, Analyst, Danske Bank/DNB Carnegie: Okay, fair enough. That’s all for me for now. Thank you very much.

Ville Ranta, CFO, Puuilo Oyj: Thanks.

Moderator: The next question comes from Fredrik Häggman Gringards from Hufvudstadsbladet. Please go ahead.

Fredrik Häggman Gringards/Svante Krokfors, Journalist/Analyst, Hufvudstadsbladet/Nordea: Hello. Thank you. I have just one simple question. I was kind of curious about the expansion to Sweden, and I would like to know if you’re planning on using your Finnish name when the time comes to open the first store in Sweden. Will it be called Puuilo there as well? Thank you.

Juha Saarela, CEO, Puuilo Oyj: Yeah. Puuilo name here in Finland is funny, and it is some kind of differentiator here, and we like to use it. As you know, Puuilo doesn’t mean anything in Finland also. That is a good question. I can’t say at the moment that are we changing it or not. Let’s see. Puuilo name could work in Nordic market also. It is a weird name, funny name, doesn’t mean anything, and so on. Let’s see, I don’t know yet.

Ville Ranta, CFO, Puuilo Oyj: Okay, thank you.

Moderator: The next question comes from Joonas Hehku from OP. Please go ahead.

Ville Ranta, CFO, Puuilo Oyj: Yes, hi, it’s Joonas from APE. A few questions. Firstly, regarding the expansion to Sweden, can you comment on how do you see the competitive landscape, and what kind of differences do you see between Finland and Sweden for the Puuilo concept?

Juha Saarela, CEO, Puuilo Oyj: Okay. In Sweden and Finland, we have, let’s say, almost the same players in the discount retail market or variety retail market. All of the main competitors are very familiar for us because they are operating in Finland also. What is coming to the differences between Finland and Sweden, we understand that and know that there are some differences in demands. I’m talking about customer demands. That is the reason why we are preparing to do some fine-tuning to our last shipment. We know that there are some other reasons, mainly from logistics reasons, that we need to source some certain products from Sweden instead of Finland. The localization needs are quite small, and we don’t need to change our assortment, even our concept heavily. It is very important because by that way, we can scale our business in Sweden also.

Ville Ranta, CFO, Puuilo Oyj: Thank you. If I recall it right, you used to have the online store for the Swedish market, but that has been closed down some time already. Obviously, it’s different if you have a store versus just an online store in the country. Can you share any learnings from that online exercise that you had previously?

Juha Saarela, CEO, Puuilo Oyj: Did you get it? I didn’t hear that.

Ville Ranta, CFO, Puuilo Oyj: Yeah, the Swedish online stores, the experience of that.

Juha Saarela, CEO, Puuilo Oyj: Yes, we have had an online store in Sweden in past years, but the sales of it were quite small. We closed it because it is not profitable or a good idea to upgrade it and maintain it because the sales was... We have not pushed marketing or resources to improve that. Of course, the situation now is different. This is one topic of our preparation to entering Sweden. We will open the homepages for Swedish customers and online store also. I don’t know when it happens, but in the near future, of course, before then we open the first store there.

Ville Ranta, CFO, Puuilo Oyj: Thank you. A final one regarding the Swedish expansion. You’ve said that, obviously, you’ve said that it’s organic, as you see it today. I’m just curious, did you look at any M&A options that may or may not have been on the table when you considered how to go to Sweden?

Juha Saarela, CEO, Puuilo Oyj: We will do our entering to Sweden mainly by organic, same concept and so on. If we see certain possibilities to buy something, I don’t know yet what it could be. Maybe we can consider also M&As. The big expansion to Sweden or other countries will be made by organic.

Ville Ranta, CFO, Puuilo Oyj: Okay, thank you. Maybe one final one from me regarding the guidance for 2025. Obviously, you’ve kept that unchanged, whereas I think previously you’ve narrowed it down a little bit over the course of the year. Obviously, the H1 results were quite strong this year. Can you open up your thinking? Why did you decide to keep the guidance unchanged at this point?

Maria Wikström, Analyst, SEB: Yeah, thanks. Last year we changed the guidance in the same event, and we ended up to give a positive result warning. Thinking that now afterwards, of course, we shouldn’t do that then. Now we see that our EBITDA will hit the range what we are here guiding. I don’t know, does it make any difference to take like $1 million out of both ends? The middle point will be the same. At the same time, I would like to highlight that we are not guiding the middle points. Market does. Our EBITDA will hit in the range what we are now guiding.

Ville Ranta, CFO, Puuilo Oyj: Okay. Maybe one follow-up. Do you expect any cost from the Swedish expansion to occur in H2, or is it more towards the upcoming years?

Maria Wikström, Analyst, SEB: I think it’s more a coming years issue. There might be some costs coming already for the H2, but as far as I know at the moment, those costs will be quite reasonable.

Ville Ranta, CFO, Puuilo Oyj: All right, thank you very much.

Moderator: The next question comes from Mika Ihamäki from DNB Carnegie. Please go ahead.

Kai Loikkanen/Kalle/Mika Ihamäki, Analyst, Danske Bank/DNB Carnegie: Thank you. A few questions on my side. This is Mika from DNB Carnegie. First, on the international expansion, I would like to understand more what means fine-tuning the stores in Sweden in the future. I understand this to some extent relates to the assortment, how about layouts, and ultimately the financial profile of a store. Should we think that these will be fairly similar in financial profile as your stores in Finland? Also, based on what components have you mapped your store locations in Sweden?

Juha Saarela, CEO, Puuilo Oyj: We will enter to Sweden, similar concept, similar layout, similar functions, and we try to do fine-tuning as less as is possible. We know that, as I mentioned, we know that we need to do some changes or fine-tunings mainly to our assortment because, of course, every country, every market, they have a little bit of different demands. For example, what comes to the brands, it can be possible that we are selling here in Finland some very well-known brands, but they don’t work in Sweden or other markets, for example. Another reason can be a logistics reason because, for example, big volume and heavy products may be that it is not a good idea to transport that kind of products from Finland to Sweden because of much more higher costs, for example, transporting costs, for example.

Yes, our layout and our store concept and layout works here in Finland very well, and they are very efficient here. You don’t need to see the reasons why that kind of solution doesn’t work in Sweden. What is coming to the locations? We have not decided anything yet. We are starting to look in store premises during the end of this year and the beginning of next year. Let’s see what we find.

Kai Loikkanen/Kalle/Mika Ihamäki, Analyst, Danske Bank/DNB Carnegie: Thank you. Secondly, following up on this, assuming there will be no significant changes to your assortment, this likely means that in a mix of gross margin terms, the relative profitability of a store should be similar to Finland. Do you think, when you have studied the market, that there is sort of a pressure in the pricing stemming from the competitive differences, although understanding that the landscape looks to you fairly similar to how it does in Finland?

Juha Saarela, CEO, Puuilo Oyj: We have investigated selling prices compared to our prices here in Finland, and we have done that investigation in neighboring countries, other countries also than in Sweden. We have quite a clear understanding of the price levels in Sweden and our competitors’ price levels in Sweden also. We can wait that we can deliver to very good profitability in Sweden also. Of course, there are some, as I mentioned, differences and changes that we need to do about our assortment, fine-tuning, localization, or something like that. In the big picture, that kind of changes and localization needs are quite small. I think that they don’t affect our profitability significantly there. The next question was...

Maria Wikström, Analyst, SEB: Regarding the store unit economics, it’s all about the sales levels. The more the store sells, the more profitable it is. We understand that when we are entering the new market, we are a new player there. In our models, we are expecting, let’s say, reasonable or, how would I put it, not expecting the big bang in the beginning. It takes time to build the brand awareness and by this way build the store net sales levels up and up. Yes, like you have said, we are expecting mostly the same kind of store unit economics there. Let’s see what kind of logistics model we choose. If we are continuing this current model, the logistics costs a little bit extra to take the goods to Sweden compared to Finland, and that might have a small effect on the gross margin side.

Like I said, it’s all about the store-specific sales. It starts from there.

Kai Loikkanen/Kalle/Mika Ihamäki, Analyst, Danske Bank/DNB Carnegie: Thank you. On your store base in Finland, you have previously showed a slide of average store sales for different vintage groups, including those that have been mature plus 10 years old. Have these changed significantly in recent years in one direction or another? For example, have your most mature stores achieved, let’s say, meaningfully higher levels than what you have shown us before?

Maria Wikström, Analyst, SEB: You mean the profitability level?

Kai Loikkanen/Kalle/Mika Ihamäki, Analyst, Danske Bank/DNB Carnegie: Average store sales. I believe that you have shown that, for example, for a mature 10-year stores of €3.4K per square meter. How have these developed recently? Have you seen that the organic capacity for these existing stores have been increasing beyond that?

Maria Wikström, Analyst, SEB: Yes, the over 10-year-old stores are still growing. Of course, not at the same rate as the newer ones, but we are still reporting there in many, many old over 10-year stores still growth. Of course, that growth is a single-digit growth, but still we have managed to maintain growth even in the oldest store we have currently.

Kai Loikkanen/Kalle/Mika Ihamäki, Analyst, Danske Bank/DNB Carnegie: Okay, that’s very clear. Thank you very much.

Moderator: The next question comes from Svante Krokfors from Nordea. Please go ahead.

Fredrik Häggman Gringards/Svante Krokfors, Journalist/Analyst, Hufvudstadsbladet/Nordea: Yes, thank you, Juha Saarela, for the extensive presentation. I will limit my questions to two. First one, do you have any comments on... You mentioned that in Q2 you posted growth in all months. Do you have any comments on trading post Q2, i.e., August and early September?

Maria Wikström, Analyst, SEB: No, no, we can’t comment the current quartal. We will come out in December with Q3. That’s all I can say from the beginning of the Q3.

Fredrik Häggman Gringards/Svante Krokfors, Journalist/Analyst, Hufvudstadsbladet/Nordea: Okay, and then the second one is regarding looking at the time of the IPO and also after that, your view on how many Puuilo stores fit into Finland has increased quite significantly. Could you, in your own words, explain what the reasons behind this? I guess it’s a combination of that you both see that there could be significantly more several stores in the larger cities and probably also target smaller cities, but perhaps in your own words, how would you explain that?

Juha Saarela, CEO, Puuilo Oyj: Yes, you are right. We have changed and upgraded our store network target two times, if I remember right. Of course, past years, we have more understanding of our potential, but at the same time, our concept and our brand is much more clear in the market. Let’s say that we have a big amount of customers here in Finland, potential customers in Finland, who have not visited our stores. That is a little bit, let’s say, surprising. Of course, it is good news. Otherwise, we have opened some stores in a little bit smaller cities or towns when comparing to the past years. The experiences of those are very promising, and our sales run very well. Now I’m talking about the cities where there are 70,000 people or even under it. The competition situation is favorable, for example, for us.

All our main competitors, they don’t have stores in smaller cities. That opens new possibilities to us.

Fredrik Häggman Gringards/Svante Krokfors, Journalist/Analyst, Hufvudstadsbladet/Nordea: Okay, thank you, Juha Saarela. That’s all from me.

Moderator: There are no more questions at this time, so I hand the conference back to the speakers.

Juha Saarela, CEO, Puuilo Oyj: Good. Thank you for the questions and joining us today. I want to thank all our customers for trusting us, and special thanks to all our employees for your work for a great summer season. Thank you.

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