Koton (KOTON) 2Q26 Financial Results

Koton reported TL9.1bn in revenue, TL1.7bn in EBITDA and a TL49mn net loss in 2Q26. Revenue was in line with both our and the market’s TL9.0bn expectations, while EBITDA came in c.11% below the TL1.9bn forecasts. The net result was also below our TL47mn net profit estimate and the market consensus of TL30mn. Weak domestic demand and increased promotional activity weighed on operating performance, while lower financing expenses limited the net loss. In line with the company’s downward revisions to its growth and store opening guidance, we updated our estimates. Accordingly, we cut our 12-month target price to TL24.00 from TL27.00 and maintain our BUY recommendation. Our target price implies c.89% upside potential. That said, despite the attractive upside, we believe a recovery in domestic demand, improvement in financing expenses and continued growth in international operations will be the key catalysts for the valuation to re-rate.