Tokmanni’s competitor Rusta grew strongly in its domestic market in Sweden

Translation: Original published in Finnish on 03/13/2025 at 08:40 am EET

Nordic discount retailer Rusta reported Q3’2024/25 sales and earnings (November-January) in line with expectations. The result improved thanks to revenue growth and good fixed cost control. The performance of Tokmanni, which we monitor, was quite favorable at the end of the year, as its growth in Sweden was in line with Rusta, and in Finland, we estimate that Tokmanni exceeded Rusta's performance.

Earnings grew at a slower pace than revenue

Rusta's Q3 revenue increased by 7% (8% currency-adjusted) to 3,483 MSEK. This was in line with the consensus expectation of 3,468 MSEK. Sales development was supported by the store network increasing by 11 stores year-on-year and fairly good sales development in existing stores (4%). The company reported that its customer numbers increased during the quarter due to successful pricing, which led to a lower gross margin year-on-year (43.5% vs. 44.3%). In addition, exchange rate fluctuations weakened the gross margin according to the company. Rusta reported that it has systematically improved and now believes it has reached a sustainable gross margin level, which, in turn, has led to an emphasis on sales growth. There was slight scalability in fixed costs, so the slower growth in earnings than in revenue was due to the weaker relative gross margin. Thus, EBITA landed in line with consensus at 383 MSEK (11.0% of revenue).

Strong development in Sweden, not so much in Finland

In Sweden, Rusta's like-for-like sales grew by 7%, customer numbers increased and the average purchase rose. Likewise, Tokmanni's Dollarstore segment saw strong growth in customer numbers (6%), average purchases (~1%) and like-for-like revenue growth (7%) was abundant. Meanwhile, ÖoB, owned by Norwegian Europris, showed weak development in Sweden (customer numbers at comparison level and like-for-like sales -1.6%), which could have been due to the ongoing integration and change in concept. Thus, Rusta's quarter in Sweden can be considered successful compared to other major discount retailers in the market. In other markets, Rusta's like-for-like sales growth (1%) remained subdued. Thus, Tokmanni (like-for-like customer volumes +5% and sales +2%) outperformed Rusta in its domestic market, which we believe stemmed from successful pricing and campaigns. Most of Rusta's revenue in Other markets is generated in Finland, so we believe that this reflects the development of the Finnish business quite well. Combining this with the subdued like-for-like revenue growth of Puuilo in Finland, we suspect Tokmanni has gained market share in the Finnish discount retail market just like in July-September.