Translation: Original published in Finnish on 6/15/2026 at 8:36 am EEST.

We have examined the sales development of Nordic discount retailers in the early part of the year, particularly from the perspective of the Finnish market. In this review, we disregarded the companies' earnings performance, as our aim is to describe a potential turnaround in market demand cycles. The figures we are presenting mainly relate to Q1, even though we are already nearly halfway through the year. A key point for almost all companies is that developments in the beginning of the year were strong relative to the comparison period, and the durable goods market also performed well according to official statistics.

Improvements in market conditions have been particularly evident in Finland

Source: Company investor reports

In our view, the sales development of almost all publicly listed discount retail chains in Finland has been quite positive during the first months of 2026. We focus in particular on the development of like-for-like stores, as this is the best indicator of structural trends in demand. Sales at like-for-like stores of domestic retailers, such as Tokmanni (+5%) and Puuilo (+8%), grew strongly during the first part of the year. Clas Ohlson’s organic growth also reached a robust level (+9%), although this figure includes one new store. As for Rusta, we estimate that its development in Finland was slightly weaker, as comparable revenue in the "Other markets" segment (of which Finland accounts for most of the sales) declined by 1% during February–April. It must be noted, however, that Rusta's comparison period was exceptionally strong (like-for-like growth of 9%), which we estimate weighs on the figure somewhat. While we believe the positive development of discount stores is partly due to an improved market environment, it is also influenced by the structural increase in the popularity of discount shopping and the gradually expanding store network of discount stores.

Certain indicators point to a market turnaround

At this point, it is premature to conclude that the market has entered a period of sustained growth, given the persistently low level of consumer confidence. In fact, consumer confidence and retail trends have recently been at odds with each other, which we believe makes the situation less predictable. However, the Finnish retail sector has shown several positive indicators (e.g., rising average spending and growing demand for everyday goods and premium products), which signal a certain degree of positive change in consumer behavior to us.

Nevertheless, uncertainties loom over the rest of the year

In our view, inflationary pressures stemming from the increased oil price are the main uncertainties and factors that could slow down development for the rest of the year. So far, only oil-based products have experienced substantial price increases in stores (Inderes' estimate 5-10%), but we anticipate that retailers will gradually pass on increased costs to customer prices across the board. Also, as core inflation rises, there is pressure for price increases across the product ranges. In our opinion, the key question is how consumers will react to rising prices and interest rates while having a record amount of disposable income. Our view is that the growth in consumption will gradually slow toward the end of the year but not dramatically. One positive aspect for discount stores and their owners is that the sector has historically fared well, even during uncertain times.

Valuation levels cannot withstand earnings disappointments

Puuilo, Rusta, and Clas Ohlson (2026e EV/EBIT ~15-18x) trade at quite high valuation multiples on the stock exchange. We consider this warranted given the companies' track record of value-creating growth and its continuity. However, we emphasize that the high absolute valuation multiples of these companies leave absolutely no room for a slowdown in growth and/or earnings disappointments. In other words, the market expects the decline in consumer purchasing power (due to rising inflation and interest rate hikes that have already begun) to remain moderate, with minimal impact on demand at discount stores or on their earnings trends. In our view, disappointing earnings would be factored into the share prices of the aforementioned companies through a leverage effect of declining earnings expectations and falling valuation multiples. For Tokmanni, valuation multiples at an absolute level are clearly lower than those of its peers due to the company's internal challenges outside of Finland, meaning any potential downside in the share price would largely stem from changes in earnings expectations.