Finland's DIY Darling Keeps Winning

We were debating in the Sprint Club: Is it (really) essential? And adden up 50/50. Nevertheless, this company print money in silence. Sometimes the best investment stories start in the most unexpected places. In 1982, a small carpentry workshop in rural Puolanka, Finland, began crafting wooden toys and souvenirs. Fast forward four decades, and that humble operation has transformed into Puuilo Plc (HEL: PUUILO), a 54-store discount retail juggernaut that's been delivering returns that would make most growth managers envious.

The Business Model That Works

Puuilo operates a deceptively simple concept: offer Finnish do-it-yourselfers an absurdly wide range of over 30,000 products at everyday low prices. The stores, strategically located in retail parks with ample parking outside city centers, cater to the car-driving handyman looking for building supplies, tools, HVAC accessories, garden equipment, pet supplies, and household goods. Think of it as Finland's answer to a combination of Harbor Freight and Tractor Supply, wrapped in Scandinavian efficiency.

What makes the model particularly compelling is its asset-light approach. Puuilo doesn't build stores on its balance sheet—it leases them. This means capital can flow back to shareholders rather than sitting locked in real estate. The company's standardized store layout ensures operational consistency across all locations, allowing customers to navigate any Puuilo store with familiar ease.

The recent financial performance speaks volumes. For fiscal year 2024 (ending January 2025), Puuilo reported net sales of €383.4 million, representing 13.3% growth. More impressive was the adjusted EBITA of €67.0 million, a 23.8% increase that pushed margins to 17.5%—exceeding management's long-term target. Earnings per share rose 24% to €0.57. Seven new stores opened during the year, a company record.

The Private Label Engine

A key driver of margin expansion has been Puuilo's aggressive push into private label products. By increasing the share of own-brand merchandise, the company captures more margin while maintaining its low-price positioning. The gross margin has steadily climbed from 36.6% to 37.7%, with Q4 2024 reaching an impressive 38.5%. This isn't accidental—it's strategic execution.

Management launched approximately 1,000 new private label products in the first half of 2025, signaling this margin-enhancing strategy has plenty of runway remaining. When you control the product, you control the economics.

Sweden: The Next Chapter

Having largely conquered the Finnish market with its current 54 stores and targeting 90+ by 2030, Puuilo is eyeing international expansion. The company plans to open pilot stores in Sweden during the current strategy period, testing whether its proven concept translates across the Baltic. CEO Juha Saarela has indicated the logistics model appears transferable, and the company is preparing its balance sheet with additional headroom for accelerated expansion.

This measured approach to internationalization—testing before scaling—reflects management discipline that long-term investors should appreciate. Sweden's discount retail market, dominated by players like Rusta, Biltema, and Jula, represents both opportunity and competition.

The Competition Question

Puuilo operates in a crowded field. Major competitors include Biltema, Motonet, Tokmanni, K-Rauta, and Clas Ohlson. Yet while competitor Tokmanni has struggled with flat growth and declining profits, Puuilo has consistently outperformed. Customer traffic increased 16.8% in fiscal 2024, with like-for-like stores showing 4.3% traffic growth. The company is winning market share, not just riding the market.

The defensive nature of Puuilo's product mix—low-priced necessities for home repair and maintenance—provides resilience during economic uncertainty. When consumers tighten budgets, they trade down to value retailers. Puuilo's customer surveys confirm it's capturing customers from competitors.

Financial Fortress?

The balance sheet presents a nuanced picture. Net debt to adjusted EBITDA sits at a comfortable 1.2x, well below the company's 2.0x limit. Puuilo recently secured a new €100 million financing agreement with OP Corporate Bank, providing ample liquidity for expansion. The current ratio of 1.57 indicates healthy short-term liquidity.

However, the debt-to-equity ratio of 212% looks alarming at first glance, though this largely reflects IFRS 16 lease liabilities rather than traditional financial debt. For an asset-light retailer that leases all its properties, this accounting treatment is expected. The substance behind the numbers is far healthier than the headline ratio suggests.

The Valuation Question

At €12.41, Puuilo trades at approximately 20 times trailing earnings and roughly 18 times forward estimates. The EV/EBITDA multiple sits around 14.5x. For a company growing revenues at 13%+ annually with expanding margins and a clear path to doubling sales by 2030, the valuation appears reasonable for a quality compounder.

Using a reverse DCF framework, the current price implies the market expects Puuilo to grow earnings at roughly 8-10% annually for the next decade with terminal growth around 2-3%. Given management's target of €800+ million in revenues by FY2030 (more than double current levels) with maintained 17%+ margins, beating these expectations seems achievable. The stock offers an attractive entry point for investors willing to hold through the Sweden expansion phase.

The proposed dividend of €0.70 per share (including a €0.24 special dividend) offers a yield near 5.6%, providing meaningful current income while the growth story unfolds.

Scorint PUUILO

Overall Score: 69/100

Puuilo represents a high-quality Finnish compounder with excellent unit economics, disciplined management, and a proven expansion playbook. The company's ability to grow traffic while expanding margins demonstrates operational excellence. The Swedish expansion represents both opportunity and risk.

For long-term investors, Puuilo offers an attractive combination of current income (5%+ yield) and growth potential (10%+ revenue CAGR target). The valuation rewards patience without demanding perfection. This is a company that knows exactly what it is and executes with Nordic precision.

As Puuilo's CEO noted, the entire company operates like one big cash machine—and for patient shareholders, that machine keeps humming. Right now it sits on my watchlist, which you can access in real-time in our community.

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