Verkkokauppa.com (VERK) Q4 2022 earnings summary

Executive summary

• FY22 revenue fell 5.5% YoY to €543.1m; operating profit was €2.3m versus €20.3m, and net profit was €0.3m versus €15.1m.

• Q4 revenue declined 8.3% YoY to €154.9m; operating profit was €0.8m, including a €1.6m inventory write-down.

• Weak consumer demand and lower purchasing power weighed on sales; a profit improvement program targets €10m annual improvement.

Financial highlights

• Q4 gross profit fell 16.4% YoY to €21.9m; gross margin was 14.1% versus 15.5%, or 15.2% excluding the €1.6m inventory write-down.

• FY22 gross profit fell 11.6% to €80.6m; gross margin was 14.8% versus 15.9%.

• FY22 EBITDA declined 69.0% to €7.8m; comparable operating profit was €3.5m versus €20.3m.

• FY22 net income was €0.3m versus €15.1m; basic and diluted EPS were €0.01 versus €0.33 basic EPS.

• Other operating expenses fell 11.3% YoY in Q4 to €8.9m, while personnel costs rose 15.0% to €11.1m.

Outlook and guidance

• FY23 revenue is expected to decline from FY22’s €543.1m, while comparable operating profit is expected to improve from €3.5m.

• The profit improvement program targets €10m annualized improvement, including €5m–€8m in 2023, through efficiencies, commercial improvements and new business models.

• Planned personnel-cost savings total €6m annually; €3m–€4m is expected in H2 2023 and full savings in 2024. Restructuring costs are estimated at €1.3m, subject to negotiations.

• Consumer demand and business conditions are expected to remain challenging, with limited visibility into an economic turnaround.