Translation: Original published in Finnish on 04/01/2026 at 08:51 am EEST

According to figures reported by the Finnish Grocery Trade Association (PTY), the department store and hypermarket chain market relevant to Kesko and Tokmanni grew by 3% in February. Sales growth was broad-based, with food sales up 3% and consumer goods sales up 2%. In consumer goods, sales of apparel grew by 4%, while sales of household and leisure goods rose by around 2%. The beginning of the year has been strong for apparel, as sales in the segment, which has performed poorly in recent years, rose by as much as 9% in January-February. We estimate that the severe winter frosts provided additional momentum to apparel growth. In our view, market developments do not yet warrant estimate changes for the companies we monitor.

Increased uncertainty has emerged over the retail sector's earnings development due to rising oil and fertilizer prices, as well as inflationary and interest rate pressures. The companies we monitor will, in principle, pass on their increased costs to customer prices. However, according to our industry sources, no visible changes have been observed in the development of domestic trade during March so far. Consumer confidence has been on a downward trend following the negative development of the aforementioned parameters, but consumers' moderate purchasing power has kept consumption behavior largely unchanged. If inflationary pressures materialize/persist and key interest rates are raised, this will likely lead to some weakening of purchasing power. This could weaken the earnings growth potential of the companies we monitor.

Kesko's development favorable compared to the market

The grocery consumer market relevant to Kesko grew by 2% in February. Kesko's consumer sales grew by 3%, so we estimate that the segment either gained market share or developed at least in line with the market. We consider this a strong performance, as increased campaigning in the industry could have even led to a loss of market share. This indicates that Kesko's price competitiveness has improved, and the renewal of its store network is slowly starting to pay off. However, in consumer goods, the company has performed weaker than the market.

Kesko's food service business, Kespro's target market, decreased by 4% in February, which was also stronger than Kespro's decline (2%). Although Kespro's sales declined, we estimate that it gained market share, which is a continuation of the positive development in previous years.

Market development in the early part of the year has been strong for Tokmanni

Market development in February was favorable for Tokmanni, with strong growth also seen in consumer goods, which are important to the company. Growth in apparel product groups is particularly crucial, as Tokmanni is one of Finland's largest apparel retailers. We believe this has also been reflected in Tokmanni's customer traffic and sales. Good target market development primarily supports our estimates, in which we expect moderate revenue growth of around 3% from the Tokmanni segment.