TCM Group A/S: Navigating Delays and Digitalization to Secure Long-Term Growth in 2025

In the face of macroeconomic uncertainty and supply chain disruptions, TCM Group A/S (TCM.CO) has demonstrated resilience in its Q2 2025 performance, leveraging strategic investments and a strong B2C momentum to navigate headwinds. The company's revised full-year guidance, while more conservative, reflects a recalibration of expectations tied to the delayed acquisition of Celebert ApS and ongoing operational upgrades. For investors, the question remains: Can TCM Group sustain its growth trajectory while expanding margins, and how do its strategic moves position it for long-term value creation?

B2C Momentum: A Pillar of Resilience

TCM Group's B2C segment has been a standout performer in 2025, contributing to a 5.3% year-on-year revenue increase in Q1 and a 4% organic growth in Denmark, its largest market. Norway, a key B2C region, saw a remarkable 11.2% revenue surge, signaling a recovery in the Nordic market. This strength is partly attributed to TCM's focus on high-margin B2C sales, which now account for 77% of total revenue, up from 70% in Q4 2024.

The company's gross margin improved to 21.1% in Q1 2025, driven by a favorable sales mix and new product launches like the AUBO “Truffel” and Svane Køkkenet “Notes Bronze” collections. However, CEO Torben Paulin noted lingering consumer hesitancy to finalize contracts, a trend observed across both B2C and B2B segments. This caution, tied to geopolitical tensions and inflationary pressures, has temporarily dampened conversion rates despite strong store traffic and quotation activity.

Strategic Investments: ERP and Lacquering Facility

TCM Group's capital expenditures in 2025 underscore its commitment to operational efficiency and digitalization. The company spent DKK 18.3 million in Q2 2025 on its ERP (Enterprise Resource Planning) project and a newly completed lacquering facility. These investments, while costly in the short term (contributing to a DKK -4 million free cash flow in Q1), are designed to streamline production, reduce lead times, and support scalability.

The lacquering facility, now operational, is expected to enhance production capacity ahead of the peak Q2 season, aligning with TCM's strategy to meet rising B2C demand. Meanwhile, the ERP rollout aims to integrate digital tools across supply chain, inventory management, and customer engagement, potentially boosting margins by reducing waste and improving order fulfillment.

Celebert Acquisition: A Long-Term Play

The delayed acquisition of the remaining 55% of Celebert ApS—a Danish online retailer of kitchens and home goods—has forced TCM Group to revise its 2025 guidance. Full-year revenue is now projected at DKK 1,250–1,300 million (down from DKK 1,250–1,400 million), with adjusted EBIT expected to range between DKK 90–110 million (previously DKK 90–120 million). While the delay reduces Celebert's 2025 impact, the company remains optimistic about its long-term potential.

Celebert, with 2024 net sales of DKK 150 million, offers TCM Group a direct-to-consumer e-commerce platform and a growing customer base. The acquisition, valued at DKK 60–85 million, is expected to be financed through bank credit facilities. With newly appointed CEO Søren Kruse, who has extensive online retail experience, TCM aims to integrate Celebert's digital capabilities into its own B2C strategy, potentially unlocking cross-selling opportunities and expanding market share.

Revised Guidance: Prudence Amid Uncertainty

TCM Group's narrowed guidance reflects a pragmatic approach to macroeconomic risks. While the company acknowledges the drag from delayed Celebert integration, it has maintained a focus on core operations. The revised revenue range of DKK 1,250–1,300 million assumes full ownership of Celebert by year-end, with adjusted EBIT growth contingent on successful integration.

The company's balance sheet remains robust, with DKK 34.3 million in cash and a debt-to-equity ratio of 55.84%. Despite the short-term cash flow pressures from CAPEX, TCM's levered free cash flow of DKK 7.52 million (TTM) and a 4.20% dividend yield suggest confidence in its ability to fund growth while rewarding shareholders.

Investment Implications

TCM Group's strategy to balance short-term prudence with long-term innovation positions it as a compelling play in the Nordic furniture and kitchen sector. Key risks include macroeconomic volatility, integration challenges with Celebert, and execution risks in its ERP rollout. However, the company's strong B2C momentum, strategic investments in digitalization, and disciplined capital allocation mitigate these concerns.

For investors, TCM Group offers a mix of defensive qualities (high ROE of 11.10%, stable dividend) and growth potential (B2C expansion, Celebert synergy). The stock's 11.65% YTD return and 37.47% five-year return outperform the ^OMXC25 index, reflecting market confidence in its resilience.

Conclusion

TCM Group A/S is navigating a complex macroeconomic landscape with a clear-eyed focus on operational efficiency and B2C growth. While the Celebert acquisition delay has tempered 2025 expectations, the company's investments in ERP, lacquering, and digitalization lay the groundwork for margin expansion and scalable growth. For long-term investors, TCM Group's strategic agility and strong balance sheet make it a compelling candidate to weather near-term headwinds and capitalize on the Nordic market's evolving demand for premium kitchen solutions.

Investment Advice: Consider a long-term position in TCM.CO, with a focus on its B2C momentum and Celebert integration. Monitor the August 20 earnings call for updates on Q2 performance and revised guidance.