Verkkokauppa.com (VERK) Q3 2022 earnings summary

Executive summary

• Q3 revenue fell 2.3% YoY to €137.8m; comparable EBIT declined to €2.1m from €4.7m as weak consumer demand and lower-margin sales pressured profitability.

• Priorities shifted to strengthening core retail performance, improving profitability, optimizing inventory and costs, and developing more profitable business models.

Financial highlights

• Q3 gross profit was €20.1m, down 3.6% YoY; gross margin was 14.6% versus 14.8%.

• Q3 reported EBIT was €1.7m versus €4.7m, net income €0.7m versus €3.5m, and EPS €0.01 versus €0.08.

• 9M revenue fell 4.3% to €388.2m; comparable EBIT was €2.8m versus €15.0m, and net result was a €0.2m loss versus €11.1m profit.

• 9M gross profit was €58.7m (15.1% margin) versus €65.0m (16.0%); reported EBIT was €1.5m versus €15.0m.

• Lower-margin product and customer segments, higher logistics and warehouse costs, and a €0.6m negative e-ville.com impact weighed on operating profit.

Outlook and guidance

• FY22 guidance, lowered on 24 October, set revenue at €530–560m and comparable EBIT at €5–9m; 2021 revenue was €574.5m.

• Consumer demand and business conditions were expected to remain challenging through year-end, with limited visibility amid inflation, higher interest rates and geopolitical uncertainty.

• Focus remained on capturing online migration and gaining share in selected categories while improving core performance and profitability.