Marimekko Corporation, Interim Report, 15 May 2024 at 8.00 a.m.
INTERIM REPORT OF MARIMEKKO CORPORATION, 1 January–31 March 2024: Marimekko’s net sales grew in the first quarter in particular as a result of timing of non-recurring promotional deliveries and operating profit improved
This release is a summary of Marimekko’s interim report for the January-March 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 first quarter in brief
- Marimekko’s net sales increased by 7 percent and totaled EUR 37.7 million (35.3). Net sales were boosted in particular by the growth of wholesale sales in Finland, as the amount of non-recurring promotional deliveries falling in the first quarter was significantly higher than estimated. The increase in net sales was also driven by the growth of international net sales.
- Net sales in Finland grew by 8 percent. International sales grew by 6 percent as wholesale sales developed favorably both in the Asia-Pacific region and North America and licensing income grew considerably.
- Operating profit was EUR 5.1 million (3.8) and comparable operating profit totaled EUR 5.2 million (3.8) equaling to 13.8 percent of net sales (10.9).
- Operating profit was boosted especially by increased net sales and improved relative sales margin. On the other hand, an increase in fixed costs had a weakening impact on 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) | 1–3/ 2024 | 1–3/ 2023 | Change, % | 1–12/ 2023 |
| Net sales | 37.7 | 35.3 | 7 | 174.1 |
| International sales | 18.2 | 17.3 | 6 | 75.2 |
| % of net sales | 48 | 49 | 43 | |
| EBITDA | 7.4 | 6.1 | 21 | 40.6 |
| Comparable EBITDA | 7.5 | 6.2 | 22 | 41.2 |
| Operating profit | 5.1 | 3.8 | 33 | 31.4 |
| Operating profit margin, % | 13.4 | 10.8 | 18.0 | |
| Comparable operating profit | 5.2 | 3.8 | 36 | 32.0 |
| Comparable operating profit margin, % | 13.8 | 10.9 | 18.4 | |
| Result for the period | 3.9 | 2.4 | 61 | 23.6 |
| Earnings per share, EUR | 0.10 | 0.06 | 61 | 0.58 |
| Comparable earnings per share, EUR | 0.10 | 0.06 | 63 | 0.59 |
| Cash flow from operating activities | -0.7 | -2.0 | 64 | 29.4 |
| Gross investments | 0.5 | 0.2 | 135 | 2.0 |
| Return on capital employed (ROCE), % | 34.1 | 27.7 | 33.0 | |
| Equity ratio, % | 58.4 | 53.6 | 54.1 | |
| Gearing, % | -1.8 | 9.6 | -6.3 | |
| Net debt / EBITDA (rolling 12 months) | -0.03 | 0.15 | -0.10 | |
| Personnel at the end of the period | 446 | 449 | -1 | 468 |
| outside Finland | 78 | 76 | 3 | 83 |
| Brand sales 1 | 99.7 | 84.5 | 18 | 376.7 |
| outside Finland | 73.7 | 60.0 | 23 | 249.0 |
| proportion of international sales, % | 74 | 71 | 66 | |
| Number of stores | 162 | 154 | 5 | 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 had a good start to the year 2024, and an impressive one in terms of our brand communications. This year, we are celebrating the 60th anniversary of the Unikko print, which supports our momentum to continue our determined work to scale up our profitable growth in spite of the weaker general market situation.
Marimekko’s net sales for the first quarter of 2024 increased by seven percent and amounted to EUR 37.7 million (35.3). Net sales were boosted especially by the growth of wholesale sales in Finland as the amount of non-recurring promotional deliveries falling in the first quarter was significantly higher than estimated. The increase in net sales was also driven by the growth of international net sales. Our international net sales increased by six percent, due to the favorable development of wholesale sales in the Asia-Pacific region and North America, as well as the significant growth of licensing income. The general market situation in Finland remained challenging. Nevertheless, the strong appeal of our brand was demonstrated by the continued positive development of our omnichannel retail sales in Finland, with growth of two percent even in a highly tactical business environment. Total net sales in Finland increased by eight percent.
Net sales growth and the improved relative sales margin increased our operating result. In January–March, our comparable operating profit grew by 36 percent to EUR 5.2 million (3.8), representing 13.8 percent of net sales (10.9). Our fixed costs increased as planned, driven particularly by investments in growth. Marimekko’s overall financial position remained strong.
In 2024, we are celebrating the 60th anniversary of our most renowned print design, Unikko, designed by Maija Isola. To celebrate the anniversary, our collections feature a number of special products and, since the turn of the year, Unikko has delighted friends of Marimekko around the world in many ways, including an installation at the Lux Helsinki light festival, a painted iconic streetcar livening up the Hong Kong streetscape, and fashion shows at Copenhagen Fashion Week and in Bangkok. In Japan, Marimekko had the honor of being the first international brand to participate in Rakuten Fashion Week Tokyo, where we presented our upcoming fall collection in mid-March. The continued celebration of the Unikko print throughout the year will provide us with an excellent opportunity to continue our consistent efforts to introduce new audiences to Marimekko and deepen our relationship with the Marimekko community in Finland and around the world.
Various brand collaborations also play an important role in increasing our international brand awareness, which is a prerequisite for our growth strategy. In the first quarter, we launched a new limited-edition brand collaboration collection with the global apparel retailer UNIQLO and a collaboration with the global technology company Samsung. After the review period, we also announced a second collaboration collection with UNIQLO and an upcoming cooperation with the Finnish brand Kalevala Jewelry that will celebrate the Unikko design.
While ensuring the global coherence of the Marimekko brand, we want to have a strong presence in the daily lives of our local customers in each market. We have defined Asia as the most important geographical region for our international growth in the coming years. This was reflected in our collections during the spring in special products and events celebrating, for instance, Lunar New Year and the sakura cherry blossom season in Japan. Omnichannel Marimekko retail, operated by us or our loose franchise partners, represents the core of our distribution strategy. In the first quarter, we complemented our omnichannel retail network in Asia by launching a new digital channel in China and Marimekko online stores in Vietnam and Malaysia were opened. In Japan, two Marimekko stores were opened in Koshigaya and Sendai. In addition, two pop-up stores delighted our customers in Australia. Our total net sales in the Asia-Pacific region increased by 22 percent in the first quarter.
Internationally growing brand awareness, our developing omnichannel store network, and impactful communal experiences around the Marimekko brand support us in scaling up our business. We are excited to continue building the global Marimekko phenomenon together with the constantly expanding Marimekko community, our shareholders, our personnel, and our partners."
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 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 inventory management and relative profitability. The domestic non-recurring wholesale promotional deliveries also raise inventory risks. 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 conference for media and institutional investors will be held in English on 15 May 2024 at 2.00 p.m. EEST. A live webcast of the conference can be followed at https://marimekko.videosync.fi/q1-2024, 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 35 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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