Puuilo Q3'25: Back on board the growth story

Translation: Original published in Finnish on 12/11/2025 at 7:05 am EET.

Puuilo reported a well-anticipated result, with revenue and earnings growing at a rate of just over 10%. We continue to see strong long-term growth and value creation potential for the company, and the share valuation has moderated as well. We raise our recommendation to Accumulate (was Reduce) and reiterate a target price of EUR 14.5.

Good progress across the board

Puuilo's Q3 was in line with our expectations, with revenue and earnings growing at a solid pace of just over 10%. Growth was supported by existing and new stores alike, though no new store openings occurred during the quarter due to timing factors. A key aspect of the company's development is seeing customer numbers continue to grow in both new and comparable stores, which is not guaranteed in the current challenging market situation. This market situation is reflected in the company's average purchase development, which has decreased in recent years. This is also partly due to the company's own initiatives, as Puuilo has invested in commercializing its own brands. Private labels grew by as much as 18% in Q3, and a similar trend has been observed in previous years. This has led to positive developments in gross margin as well as profitability, offsetting the impact of cautious consumer behavior on the company's bottom line.

We made minor estimate revisions

Puuilo refined its guidance in connection with the Q3 result and expects revenue in 2025 to settle at 430–450 MEUR (previously 425–455) and adj. EBITA at 72–79 MEUR (previously 70–80). We lowered our high expectations for Q4 and slightly raised our cost estimates for the coming years due to additional costs caused by the rapid pace of store openings and internationalization. Overall, our EBITA estimates decreased by 1-2%.

Expansion continues

The company announced that it will open at least 7 new stores next year and teased the possibility of opening even more. We therefore estimate that the company will open 8 new stores in 2026, which would be a record number for Puuilo. From now on, stores will open at a rate of approximately 7 per year, meaning that by the end of the strategy period (2030), there will be a network of 91 stores in Finland. The internationalization part of the strategy is still in the planning stages, as the company is currently recruiting a country manager for Sweden. Puuilo's management stated on the earnings release day that they might have a clearer view of the exact store opening pace in the spring. In any case, costs associated with internationalization will increase in the coming years, requiring support from Finnish operations prior to store openings. We believe that the company will be able to offset these temporary costs weighing on the result by increasing volume, improving the gross margin (private label), and scaling up maturing stores. We expect the company's revenue to grow at an annual rate of approximately 12%, with Puuilo achieving an EBITA margin of 18% by the end of 2030. Key forecast risks relate in the short term to consumer sentiment and the development of geopolitical risks, and in the longer term to intensifying competitive situation.

The stock's risk/reward has turned attractive

Based on the realized earnings, the share's valuation is somewhat tight, which, in our view, acts as a negative driver for the expected return. However, the earnings growth we predict (17%/year) will bring the multiples down to attractive levels in the medium term, which will more than compensate for the negative impact of the actualized multiples. In addition, expected returns are supported by the solid foundation of a 4-6% dividend yield. Overall, Puuilo's expected return exceeds the required return, meaning the risk/reward ratio of the share can be considered attractive. With the fundamentals remaining unchanged in the big picture, the negative share price reaction offers an opportunity to get back on board with a high-quality company that has grown its market position, in which we see great long-term potential.