Fiskars: Read-across from Home Depot Q1 - Nordea

Home Depot reported its Q1 yesterday and trimmed its full year guidance due to lumber deflation, weather and further softening demand relative to the company expectations. The company notes continued uncertainty regarding consumer demand. Home Depot cut its top line guidance from flat growth in 2023 and now expects sales and comparable sales to decline 2-5% in 2023 with 14.0-14.3% operating margin (from earlier ~14.5%). When considering read-across to Fiskars, we note that the Home Depot commented on good gardening demand and smaller ticket items performing above high ticket items. According to the company, consumer price sensitivity has increased. We have modelled Fiskars’ Terra sales to be flat y/y on comparable basis in Q2 with replenish sales picking up during the quarter. Home Depot inventories were flat y/y in Q1, while the company commented that first two weeks of May have performed in line with full year guidance (i.e. down 2-5% y/y on comparable basis) with continued negative impact from lumber deflation. Home Depot Q1 sales were down 4.5% y/y on comparable basis with March being the weakest month in terms of sales growth. Overall, we still expect replenish sales to occur in Q2, while softening demand creates some uncertainties over Fiskars Q2 sales development, especially within Terra. For Q2, we are 2% above Refinitiv consensus on sales and 6% above on adjusted EBIT. We have a fair value range of EUR 17.5-21.6 per Fiskars share.