Q1/2020 First-quarter revenue grew by 5.8% and comparable EBIT - PowerPoint PPT Presentation

Q1/2020 First-quarter revenue grew by 5.8% and comparable EBIT improved Mika Rautiainen, CEO Markku Pirskanen, CFO 29 April 2020

Q1/2020: good performance • Revenue grew by 5.8% (8.3%) to EUR 199.0 million (188.1) • Like-for-like revenue grew by 4.4% (4.1%) • Comparable gross profit totalled EUR 63.8 million (58.6), comparable gross margin was 32.1% of revenue (31.2%) • Comparable EBIT was EUR 0.3 million (-2.2), representing 0.1% of revenue (-1.2%) • Earnings per share were EUR -0.04 (-0.07) 2 29.4.2020 Tokmanni's Business Review January-March 2020

Tokmanni’s and non-grocery market development, % Sales development, % 12,0 10,2 11,0 9,9 10,9 8,0 8,3 7,8 8,0 5,8 7,6 6,1 4,0 4,5 4,4 4,0 1,9 1,6 1,4 0,0 0,6 1,1 -0,1 -1,1 -1,9 -4,0 -2,9 -8,0 -7,4 -7,0 -9,0 -11,0 -12,0 Q1/17 Q2/17 Q3/17 Q4/17 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/19 Q3/19 Q4/19 Q1/2020 Tokmanni Käyttötavaramarkkina The member companies of the FGTA operate the department store and hypermarket chains of K-Citymarket, Prisma, Sokos, Tokmanni and Minimani. FGTA STATISTICS DOESN’T INCLUDE ONLINE RETAIL SALES 3 29.4.2020 Tokmanni's Business Review January-March 2020

Highlights Q1/2020 • Like-for-like revenue developed very well despite the lack of a normal winter season in southern Finland • Positive comparable EBIT for the first time in Tokmanni’s history achieved due to good sales performance, improved gross margin and efficient operations • Due to the COVID-19 epidemic (coronavirus) the guidance for 2020 was cancelled and changes in action plan was initiated 4 29.4.2020 Tokmanni's Business Review January-March 2020

Impacts of coronavirus on business in Q1/2020 • Tokmanni-Europris Shanghai trading company started daily monitoring in January, delivery delays at worst 3-4 weeks, currently the situation has been normalized • Grocery sales have increased since the start of hoarding • After the restrictions came into force, customer visits to stores decreased clearly • However, the basket size increased strongly • Online sales grew strongly from the end of March 5 29.4.2020 Tokmanni's Business Review January-March 2020

Online sales grew strongly from the end of March • Strong sales, especially in the following product groups: sports and leisure, yard and garden, cleaning and tidying, and home decoration • Investments in the development of digital services and e-commerce as well as in improving the customer experience continued • The targets is to expand the product range, even multiply it, and the measures are underway 6 29.4.2020 Tokmanni's Business Review January-March 2020

Key measures during a coronavirus epidemic • Measures to promote safety in stores, warehouses and offices • Contingency plans in stores, logistics centre and office • Close contact with the Tokmanni-Europris sourcing company based in China • Adjusting the business to meet the lower customer visits in the stores • Customizing product purchase plans, especially in clothing • Improving the efficiency of digital services and investing in e-commerce • Amendments of marketing actions • Careful consideration and reassessment of investments required for development projects • Clear risk management actions and related measures • Increasing sustainability work 7 29.4.2020 Tokmanni's Business Review January-March 2020

Many thanks to Tokmanni employees for their commitment and excellent work during these exceptional times. In line with our values, we have worked together to serve our customers safely and to adapt Tokmanni's operations to a new and unfamiliar situation. 8 29.4.2020 Tokmanni's Business Review January-March 2020

Financial review

Tokmanni’s operations are subject to seasonality Q1/2020: Like-for-like revenue grew by 4.4% (4.1%) and total revenue by 5.8% (8.3%). Comparable Revenue, EBIT, M€ M€ 35,0 32,0 300,0 30,0 25,3 250,0 25,0 21,9 18,7 200,0 20,0 15,5 13,1 15,0 150,0 284,8 268,4 239,9 231,5 10,0 217,7 210,7 199,0 100,0 188,1 173,7 5,0 0,3 50,0 0,0 - 2,2 - 1,9 - 5,0 0,0 Q1/18 Q2/18 Q3/18 Q4/18 Q1/19 Q2/2019 Q3/2019 Q4/2019 Q1/2020 Revenue Comparable EBIT, % 10 29.4.2020 Tokmanni's Business Review January-March 2020

Comparable gross profit 63,8 58,6 • The gross profit was impacted positively by the increase in the share of direct imports and private label products. • On the other hand, the large proportion of grocery products in the sales structure in March slightly reduced gross margin-%. 31,2 % 32,1 % Q1/2019 Q1/2020 Comparable gross profit, MEUR Comparable gross margin, % 11 29.4.2020 Tokmanni's Business Review January-March 2020

Direct import’s share of sales 23,6 % 22,2 % 10,3 Other 10,5 direct import Import through 13,3 11,6 Shanghai Q1/2019 Q1/2020 29.4.2020 12 Tokmanni's Business Review January-March 2020

Private label's share of sales Private label* 29,1 % 70,9 % Other (28,1) (71,9) Q1/2020 (Q1/2019) * Includes private label products, products of exclusive distribution and non-branded products 29.4.2020 13 Tokmanni's Business Review January-March 2020

Operating expense relative share developed favourably • Comparable operating expenses were EUR 48.5 Comparable operating expenses million (46.8), or 24.4% of revenue (24.9%) 48,5 – The increase in euro-denominated operating expenses was mainly due to the additional operating expenses that came from the new stores added to the store network 46,8 – In addition, leasing of additional warehouses and contingency measures implemented to counter the effects of the coronavirus epidemic increased expenses 24,9 % 24,4 % • Personnel expenses were EUR 28.0 million (26.8), or 14.1% of revenue (14.2%) Q1/2019 Q1/2020 Comparable operating expenses, MEUR Share of revenue, % 14 29.4.2020 Tokmanni's Business Review January-March 2020

Comparable EBIT improved Comparable EBIT, MEUR 0,3 Q1/2019 Q1/2020 -2,2 Comparable EBIT margin, % Q1/2019 Q1/2020 -1,2 % 0,1 % 15 29.4.2020 Tokmanni's Business Review January-March 2020

Balance sheet, cash flow and financial position 238,8 • Tokmanni’s inventories amounted to EUR 238.8 million (214.0) at the end of March 2020 214,0 • Cash flow from operating activities amounted to EUR -23.5 million (-28.3) in the first quarter • Tokmanni’s liquidity is good. At the end of March 2020, the company’s cash and cash equivalents and undrawn credit limits totalled EUR 58,5 million (31 March 2019: 64,3) • At the end of March 2020, Tokmanni’s interest-bearing debt totalled 190 188 EUR 425.9 million (428.0) of which stores stores – non-current loans from financial institutions and corporate bonds were EUR 100.0 (100.0) million and current loans from financial institutions and corporate bonds EUR 13.9 million (10.0) 31.3.2019 31.3.2020 • The ratio of net debt to comparable EBITDA (rolling 12 months) was Inventories, MEUR 3.1 (3.8) Number of stores 16 29.4.2020 Tokmanni's Business Review January-March 2020

Net capital expenditure Net capital expenditure, MEUR • Net capital expenditure in the first quarter totalled 3,2 EUR 3.2 million (2.7) – Capital expenditure was mainly focused on the expansion of the store network, renovations of stores and the development of digital services. • Capital expenditure in 2020 is expected to be around 2,7 EUR 15 million. Q1/2019 Q1/2020 17 29.4.2020 Tokmanni's Business Review January-March 2020

KEY FOCUS 2020: Strengthening discount retailer business model Adapting to changing market environment

Impacts of coronavirus epidemic on Tokmanni’s business Q1 Q2 Q3 Q4 Significant Initial Stabilization Recovery impact impact • Customer visits are falling, average basket size is • Return to normal opening • Delivery delays from • Start of the Christmas increasing hours China 3-4 weeks season • Additional costs to ensure • Normalization of • Emphasis on grocery • Leveraging the safety of employees and workplace arrangements sales strengths of the customers • Batch buying discount retailer • Actions to secure the business business continuity • Strengthening online sales Consumer confidence, spending and possible restrictions are the key variables 19 29.4.2020 Tokmanni's Business Review January-March 2020

Tokmanni’s outlook for 2020 • Due to the uncertainty caused by the coronavirus, the economic and industry’s outlook has changed rapidly. • Since it is still difficult to assess the financial impact of the exceptional situation, Tokmanni Group Corporation will not issue guidance for 2020. • Once visibility improves and the material uncertainties have cleared, Tokmanni will update its outlook and issue a new guidance. 20 29.4.2020 Tokmanni's Business Review January-March 2020

Half-year financial review 2020 published on 29 July 2020 IR contact: Maarit Mikkonen maarit.mikkonen@tokmanni.fi +358 40 562 2282 ir@tokmanni.fi

Thank you! ir@tokmanni.fi tokmanni.fi