skip to Main Content
enquiries@thearmchairtrader.com

Sign up for our Free Daily Digest newsletter: Actionable insight every morning, designed for the self-directed investor. Find out more

Verkkokauppa.com’s goal is to be a Nordic leader in retail. The company is transferring to the official list of the Nasdaq Helsinki Stock Exchange during 2020. Verkkokauppa.com was listed on the Nasdaq First North Growth Market Finland marketplace in 2014 and will be transferred to the official list of Nasdaq Helsinki on 5 June 2020.

The 52-week trading range for Verkkokaupa.com shares is €2.49 to 5.28. The stock closed on the news on May 29th at 5.22, a 52 week closing high. In November 2017 the stock peaked at €9.95. The market cap is at €235 million and 2019’s turnover was €504 million. I am targeting €8-10 this year.

What are the risks?

Amazon is coming to Sweden soon, but Amazon has been in Germany for years and Verkkokauppa has grown profitable every year since it become public trading stock and increasing it’s dividend quarterly. In Finland they are a very trusted brand and during Covid-19 they have accelerated the growth of the business.


Verkkokauppa.com – the story so far…

Verkkokauppa.com started out selling electronic goods 28 years ago, founded by 16-year-old Samuli Seppälä who still owns 49% of the company.

Verkkokauppa had a different philosophy from many international ecommerce actors from the start. Verkkokauppa.com’s customer base would grow with new product categories, but not by trying to widen the market geographically. According to the company:

“A lot of online retailers have a strategy to go to other countries, but we will stay in Finland and expand our selections where we know our conumers. So we only do business in Finland, we don’t market ourselves in any other language than Finnish and we have no plans [for] going outside the country. Our brand is well known in Finland, but outside we wouldn’t be anything.”

According to Seppälä in a 2015 interview, when asked if one day he might find Finland too small for the company –

“I don’t think so. We only have a very small percentage of the total retail market in Finland. Some go crazy and try to conquer other countries with unknown brands starting from zero. We felt that we need to get to Finland first, by introducing new categories and products.”

Following a 2017 partnership with Santander Credit Finance, Verkkokauppa’s profitability improved with the wider use of its Apuraha payment in installments method, including new payment methods like Apuraha XXL and Apuraha for Business, as well as by increasing sales in the recently launched higher margin product categories such as Home and Lighting, and Pets. Profitability has therefore not been improved by increasing prices. At the same time, however, Verkkokauppa will keep its mind focused on its new medium-term targets for revenue growth and profitability.

In 2018 new CEO Panu Porkka took over and Seppälä stepped aside. Porkka was CEO of the Finnish bookstore Suomalainen Kirjakauppa Oyj from 2017 – 2018 and from where he was headhunted from to run Verkkokauppa. His years as Tokmanni Sales Director from 2012 -2017 made him a very good choice to run Verkkokauppa in the wake of founder and owner Seppälä.

Omni channel and scalable business model

Verkkokauppa.com’s agile and scalable business model effectively combines a web store and four megastores. The competitive advantages and strengths also include a low cost structure, a well-known brand and its own ERP system and ecommerce platform. The continuously evolving, Omni channel service concept ensures a superior customer experience.

Verkkokauppa.com offers more than 65,000 products in 26 different product categories. Its customer promise is to sell its products at ‘probably’ cheaper prices.

The constant changes in consumer behavior and in the retail sector support the shift towards online and mobile. Verkkokauppa.com’s web store received more than 70 million visits in 2019. It is Finland’s best known and most visited web store. Verkkokauppa.com has a strong foothold in consumer electronics in Finland. Despite the very competitive and price-driven market, Verkkokauppa.com has succeeded in outgrowing the market.

Debt free and strong balance sheet

Verkkokauppa.com is a debt-free company with a strong balance sheet position. The cash reserves are appropriate for business development and enable the determined pursuit of growth. Verkkokauppa.com’s goal is to be a Nordic leader in retail and grow to a company with billion-euro revenue.

Verkkokauppa is targeting annual revenue growth of 10–20% in the medium term. In addition, Verkkokauppa.com is aiming to grow its operating profit and an operating profit margin of 2.5–4.5% in the medium-term. Verkkokauppa.com’s goal is to pay out a quarterly growing dividend. The annual dividend payout has increased every year since 2015.

Verkkokauppa.com filed a listing application with Nasdaq Helsinki to list its shares on the official list of Nasdaq Helsinki on 28 May 2020. Trading in the shares is expected to commence on the official list of Nasdaq Helsinki on or about 5 June 2020, provided that Nasdaq Helsinki approves its listing application.

According to Porkka:

“The company has grown consistently during the recent years and this is a natural next step for us. As the most popular Finnish web store, we are well prepared for the current disruption in the market, in which retail is rapidly moving online. Verkkokauppa.com has gone through several phases of development since its foundation in 1992. The listing of the company on the official list of the Nasdaq Helsinki marks the start of the next chapter in the company’s history.”

At the same time, Verkkokauppa.com has requested its shares to be removed from the First North Growth Market Finland marketplace maintained by Nasdaq Helsinki.

Please note this article does not constitute investment advice. Investors are encouraged to do their own research beforehand or consult a professional advisor.

Raine Lahtinen

Raine Lahtinen

Raine Lahtinen has spent over 25 years in wealth management and trading. His active investment days started when he attended University of Miami 1987-1991 majoring in International Finance and Marketing. He has experienced the highs and lows of the stock markets since the 1987 crash, Dot.com bubble 2001-2002, the 2008 financial crisis and the current record breaking rally.

Since 1995, Raine has been based in Brussels, Belgium in Continental Europe as an international financial advisor and director of investments in various UK IFA firms. He has written many popular columns about markets and investments during his professional life. His passion is finding undervalued listed stocks. As a Finnish native he specializes on Nordic and US stocks.

Comments

Back To Top