Marimekko Corporation, Interim Report, 6 November 2024 at 8.00 a.m.
INTERIM REPORT OF MARIMEKKO, 1 Jan–30 Sept 2024: Marimekko’s net sales in Q3 nearly at the record level of the comparison period despite the timing of non-recurring promotional deliveries, operating profit margin remains excellent
This release is a summary of Marimekko’s interim report for the January-September period of 2024. The complete report is attached to this release as a pdf file and it is also available on the company’s website at company.marimekko.com under Releases & publications.
The third quarter in brief
- Marimekko’s net sales decreased by 1 percent and totaled EUR 47.2 million (47.9). Net sales were weakened, in particular, by the lower wholesale sales in Finland. On the other hand, retail sales developed well in all market areas, especially in Finland, and grew in total by 12 percent.
- Net sales in Finland decreased by 9 percent when non-recurring promotional deliveries, as expected, were lower than in the strong comparison period. Retail sales in Finland increased by 8 percent. International sales grew by 9 percent with both retail and wholesale sales increasing.
- Operating profit was EUR 11.1 million (12.9). Comparable operating profit was behind the strong comparison period and totaled EUR 11.1 million (13.1) equaling to 23.5 percent of net sales (27.4).
- Higher fixed costs, in particular, decreased operating profit in the third quarter of the year.
January-September in brief
- Company’s net sales grew by 4 percent and amounted to EUR 128.6 million (123.5). Net sales were especially boosted by the growth of retail sales in Finland and an increase in wholesale sales in the Asia-Pacific region. On the other hand, net sales were negatively impacted by a decrease in wholesale sales in the EMEA region.
- Net sales in Finland increased by 2 percent due to favorable development of retail sales. International sales grew by 7 percent with retail sales increasing in all and wholesale sales in nearly all market areas.
- Operating profit totaled EUR 22.3 million (23.3) and comparable operating profit EUR 22.7 million (23.7) equaling to 17.6 percent of net sales (19.2).
- Operating profit was weakened especially by higher fixed costs. On the other hand, an increase in net sales boosted operating profit.
Financial guidance for 2024
The Marimekko Group's net sales for 2024 are expected to grow from the previous year (2023: EUR 174.1 million). Comparable operating profit margin is estimated to be approximately some 16–19 percent (2023: 18.4 percent). Development of consumer confidence and purchasing power, particularly in Finland, global supply chain disruptions and the general inflation development cause volatility to the outlook for 2024.
Uncertainties related to the development of net sales and result are described in more detail in the Major risks and factors of uncertainty section of the Interim Report.
Key Figures
| (EUR million) | 7–9/ 2024 | 7–9/ 2023 | Change, % | 1–9/ 2024 | 1–9/ 2023 | Change, % | 1–12/ 2023 |
| Net sales | 47.2 | 47.9 | -1 | 128.6 | 123.5 | 4 | 174.1 |
| International sales | 21.5 | 19.7 | 9 | 58.9 | 55.1 | 7 | 75.2 |
| % of net sales | 46 | 41 | 46 | 45 | 43 | ||
| EBITDA | 13.4 | 15.2 | -12 | 29.3 | 30.2 | -3 | 40.6 |
| Comparable EBITDA | 13.5 | 15.4 | -13 | 29.7 | 30.6 | -3 | 41.2 |
| Operating profit | 11.1 | 12.9 | -14 | 22.3 | 23.3 | -4 | 31.4 |
| Operating profit margin, % | 23.5 | 27.0 | 17.3 | 18.9 | 18.0 | ||
| Comparable operating profit | 11.1 | 13.1 | -15 | 22.7 | 23.7 | -4 | 32.0 |
| Comparable operating profit margin, % | 23.5 | 27.4 | 17.6 | 19.2 | 18.4 | ||
| Result for the period | 8.4 | 10.3 | -19 | 17.1 | 17.5 | -3 | 23.6 |
| Earnings per share, EUR | 0.21 | 0.25 | -19 | 0.42 | 0.43 | -3 | 0.58 |
| Comparable earnings per share, EUR | 0.21 | 0.26 | -20 | 0.43 | 0.44 | -3 | 0.59 |
| Cash flow from operating activities | 4.4 | 5.4 | -20 | 14.7 | 8.4 | 75 | 29.4 |
| Gross investments | 0.6 | 0.5 | 17 | 1.8 | 1.2 | 49 | 2.0 |
| Return on capital employed (ROCE), % | 32.5 | 32.0 | 33.0 | ||||
| Equity ratio, % | 58.3 | 53.2 | 54.1 | ||||
| Gearing, % | 0.7 | 22.7 | -6.3 | ||||
| Net debt / EBITDA (rolling 12 months) | 0.01 | 0.34 | -0.10 | ||||
| Personnel at the end of the period | 459 | 451 | 2 | 468 | |||
| outside Finland | 75 | 76 | -1 | 83 | |||
| Brand sales 1 | 119.1 | 92.4 | 29 | 309.5 | 280.8 | 10 | 376.7 |
| outside Finland | 85.2 | 54.7 | 56 | 218.8 | 191.5 | 14 | 249.0 |
| proportion of international sales, % | 72 | 59 | 71 | 68 | 66 | ||
| Number of stores | 166 | 166 | 167 |
The change percentages in the table were calculated on exact figures before the amounts were rounded to millions of euros. The figure for comparable earnings per share takes account of similar items as comparable operating profit; tax effect included. Reconciliation of alternative key figures to IFRS and management’s discretion regarding items affecting comparability are presented in the table section of the Interim Report.
1 Brand sales are given as an alternative non-IFRS key figure, representing the reach of the Marimekko brand through different distribution channels. An unofficial estimate of sales of Marimekko products at consumer prices, brand sales are calculated by adding together the company’s own retail net sales and the estimated retail value of Marimekko products sold by other retailers. The estimated retail value is based on the company’s realized wholesale sales and licensing income. Brand sales do not include VAT, and the key figure is not audited. Some licensees provide exact retail figures, in which case these figures are used in reporting brand sales. For other licensing agreements, Marimekko’s own retail coefficients for different markets are used. Licensing income is reported as brand sales when licensed products are sold.
Tiina Alahuhta-Kasko, President and CEO, in conjunction with the report:
“Marimekko continued to progress well in its SCALE growth strategy in the third quarter in spite of the challenging market situation. Our own channels in Finland and other market areas developed well, and our international net sales grew. Our operating profit margin was at an excellent level.
Marimekko’s net sales for the third quarter were almost on a par with the record high achieved in the comparison period, amounting to EUR 47.2 million (47.9). As previously estimated, non-recurring promotional deliveries in the wholesale sales in Finland were lower than in the strong comparison period, which reduced net sales. On the other hand, net sales were increased by the positive development of retail sales in all market areas, especially Finland. Retail sales in the important domestic market grew by eight percent despite the continued challenging market situation. This speaks not only to the appeal of the Marimekko brand but also the excellent work done by everyone at Marimekko in constantly changing circumstances, which enables our commercial agility. Total net sales in Finland decreased by nine percent. International sales grew by nine percent in the third quarter, with wholesale sales growing in the Asia-Pacific region and Scandinavia, and retail sales developing well in all market areas.
Our comparable operating profit for July–September was EUR 11.1 million (13.1), and the comparable operating profit margin remained at an excellent level at 23.5 percent of net sales (27.4). Operating profit was affected particularly by higher fixed costs, which were due to planned investments in the brand marketing of the 60th anniversary of the Unikko print and increased personnel expenses, among other factors. Our financial position remained strong.
In January–September, our net sales grew by four percent and amounted to EUR 128.6 million (123.5). Our comparable operating profit came to EUR 22.7 million (23.7), representing 17.6 percent of net sales (19.2).
In our growth strategy, we have defined a sharpened creative vision to speak to a wider global audience as one of our success factors. One visible example of our long-term efforts to develop our brand and collections is our first denim collection Marimekko Maridenim, which arrived in stores in August. Marimekko Maridenim pieces complement our existing lifestyle assortment and they have been designed following the Ellen MacArthur Foundation’s Jeans Redesign Guidelines, which are based on the principles of a circular economy. Influencers and members of the Marimekko customer community came together around the world to see our first denim products at our impressive launch events organized for the new product category in locations such as Shanghai, Tokyo, New York and Helsinki. The Marimekko Maridenim collection has been enthusiastically received by consumers.
The 60th anniversary of the Unikko print, which has brought a special splash of color to the entire year, was again prominently featured in our marketing in the third quarter. At a fashion show held in Taipei in August, we celebrated the Unikko print, Marimekko Maridenim and the first store in Asia featuring our newest store concept. In September, the iconic print was in limelight during Helsinki Design Week at the Bar Unikko pop-up restaurant. The concept was a repeat of our very popular pop-up café at Milan Design Week earlier this year. The stunning Unikko design also plays the main role in the silver jewelry collection created in collaboration with Kalevala Jewelry, which arrived in stores in October. At the same time, our eyes are also on the future and at our show at Copenhagen Fashion Week in August, we presented our first collections for 2025 to a large audience of international media, influencers, buyers and friends of Marimekko.
In the development of our omnichannel retail network, the most significant event in the third quarter concerned our new online store platform. Following a successful pilot carried out in the United States in the spring, the new platform was expanded to all of our other markets in September. The new platform enables our online store to simultaneously provide an even more personalized customer experience as well as plenty of opportunities for automation, among others. Our network of physical stores also developed, with a new Marimekko store opened in Shanghai and five pop-up stores around Asia, for example.
In September, we organized our second Capital Markets Day, at which Marimekko's top management elaborated on the progress of the SCALE strategy during the first 18 months of the strategy period. At the event, the company also discussed the previously described growth and profitability drivers to achieve its long-term financial targets. Marimekko’s strong financial position and the positive development of the business provide us with excellent opportunities to continue our work to scale up our profitable growth and expand the Marimekko phenomenon and community around the world.”
Market outlook and growth targets for 2024
The uncertainties related to the development of the global economy, such as geopolitical tensions and their impact on the general economic situation, and general cost inflation influence consumer confidence, purchasing power and behavior and, as a result, can have an impact on Marimekko’s business in 2024, especially in the important domestic market of Finland. Different exceptional situations may cause even significant disruptions in production and logistics chains, and may thus have a negative impact on the company’s sales, profitability and cash flow.
Finland, Marimekko’s important domestic market, traditionally represents about half of the company’s net sales. Sales in Finland in 2024 are impacted by the weak general economy and low consumer confidence as well as the development of purchasing power and behavior. The tactical operating environment also has an impact on the business. The timing between quarters of the non-recurring promotional deliveries in Finnish wholesale sales and their size typically vary on an annual basis. In 2024, the non-recurring promotional deliveries in wholesale sales are expected to be significantly lower than in the comparable year and weighted clearly in the first half of the year. Despite the weak market situation, net sales in Finland are expected to be approximately at the level of the previous year.
International sales are estimated to grow in 2024. In the strategy period 2023–2027, Marimekko will focus on Asia as the most important geographical area for international growth. In 2024, net sales in the Asia-Pacific region, Marimekko’s second-largest market, are expected to increase. Japan is clearly the most significant country in this region to Marimekko and already has a very comprehensive network of Marimekko stores. All brick-and-mortar Marimekko stores and most online stores in Asia are partner-owned. In 2024, the aim is to open approximately 10–15 new Marimekko stores and shop-in-shops, and most of the planned openings will be in Asia.
Licensing income in 2024 is forecasted to be approximately at the previous year’s record level.
Because of the seasonal nature of Marimekko’s business, the major portion of the company’s euro-denominated net sales and operating result are traditionally generated during the second half of the year.
Marimekko develops its business with a long-term view and aims to scale its profitable growth in the upcoming years. In 2024, fixed costs are expected to be up on the previous year. The general cost inflation continues to also affect Marimekko in 2024. Personnel expenses are impacted, for example, by general pay increases in different markets. In 2024, Marimekko is celebrating the 60th anniversary of the Unikko pattern, which provides the company with a unique opportunity to grow international awareness through, for example, various events around the world. Marketing expenses are expected to increase (2023: EUR 9.5 million).
Early commitments to product orders from supplier partners, typical of the industry but partly further emphasized by the exceptional situations, undermine the company’s ability to optimize product orders and respond to rapid changes in demand and consumer behavior, which also increases risks related to sales, inventory management and relative profitability. The domestic non-recurring wholesale promotional deliveries also raise inventory risks. In addition, risk of delays in production and logistic chains is higher than usual and if realized, these kinds of delays can have an impact on the company’s sales and profitability. Marimekko works actively to ensure functioning production and logistics chains, to avoid delays, to mitigate the negative impacts of generally increased costs, and to enhance inventory management.
Marimekko is closely monitoring the general economic situation, the development of consumer confidence and purchasing power and the impacts of different exceptional situations, and the company will adjust its operations and plans according to the circumstances.
Media and investor conference
A media and investor conference will be held in English on 6 November 2024 at 2.00 p.m. EET. A live webcast of the conference can be followed at https://marimekko.videosync.fi/q3-2024, and a recording of the webcast will be available at the same address later. Questions can be asked during the live webcast in writing.
Further information:
Tiina Alahuhta-Kasko, President and CEO, tel. +358 9 758 71
Elina Anckar, CFO, tel. +358 9 758 7261
MARIMEKKO CORPORATION
Corporate Communications
Anna Tuominen
Tel. +358 40 5846944
anna.tuominen@marimekko.com
DISTRIBUTION:
Nasdaq Helsinki Ltd
Key media
Marimekko is a Finnish lifestyle design company renowned for its original prints and colors. The company’s product portfolio includes high-quality clothing, bags and accessories as well as home décor items ranging from textiles to tableware. When Marimekko was founded in 1951, its unparalleled printed fabrics gave it a strong and unique identity. In 2023, the company's net sales totaled EUR 174 million and comparable operating profit margin was 18.4 percent. Globally, there are roughly 170 Marimekko stores, and online store serves customers in 38 countries. The key markets are Northern Europe, the Asia-Pacific region and North America. The Group employs about 470 people. The company’s share is quoted on Nasdaq Helsinki Ltd. www.marimekko.com.
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