INTERIM REPORT OF MARIMEKKO CORPORATION, 1 January – 30 September 2023: Marimekko’s net sales grew and operating profit improved in the third quarter
Marimekko Corporation, Interim Report, 8 November 2023 at 8.00 a.m.
INTERIM REPORT OF MARIMEKKO CORPORATION, 1 January – 30 September 2023: Marimekko’s net sales grew and operating profit improved in the third quarter
This release is a summary of Marimekko’s interim report for the January-September period of 2023. 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 increased by 9 percent and totaled EUR 47.9 million (44.1). The increase in net sales was driven particularly by growth in wholesale sales both internationally and in Finland.
- Net sales in Finland grew in total by 6 percent as non-recurring promotional deliveries increased domestic wholesale sales and retail sales amounted almost to the record-high level of the comparison period. International sales grew by 13 percent.
- Operating profit was EUR 12.9 million (11.1) and comparable operating profit totaled EUR 13.1 million (11.1) equaling to 27.4 percent of net sales (25.2).
- Operating profit was boosted especially by increased net sales but also by the improved relative sales margin. On the other hand, an increase in fixed costs had a weakening impact on operating profit.
January-September in brief
- Company’s net sales grew by 5 percent and amounted to EUR 123.5 million (118.1). Net sales were boosted in particular by increased international wholesale sales.
- International sales grew by 10 percent. Net sales in Finland were on par with the comparison period.
- Operating profit was EUR 23.3 million (23.4) and comparable operating profit totaled EUR 23.7 million (23.4) equaling to 19.2 percent of net sales (19.8).
- Operating profit was boosted by increased net sales. On the other hand, higher fixed costs and lower relative sales margin had a weakening impact on operating profit.
Financial guidance for 2023
The Marimekko Group's net sales for 2023 are expected to grow from the previous year (2022: EUR 166.5 million). Comparable operating profit margin is estimated to be approximately some 16–19 percent (2022: 18.2 percent). Development of consumer confidence and purchasing power, global supply chain disruptions and the general inflation development, in particular, cause volatility to the outlook for 2023.
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.
|% of net sales||41||39||45||42||41|
|Operating profit margin, %||27.0||25.2||18.9||19.8||18.2|
|Comparable operating profit||13.1||11.1||18||23.7||23.4||1||30.4|
|Comparable operating profit margin, %||27.4||25.2||19.2||19.8||18.2|
|Result for the period||10.3||8.9||17||17.5||18.7||-6||22.7|
|Earnings per share, EUR||0.25||0.22||17||0.43||0.46||-6||0.56|
|Comparable earnings per share, EUR||0.26||0.22||19||0.44||0.46||-4||0.56|
|Cash flow from operating activities||5.4||7.0||-23||8.4||8.4||0||20.1|
|Return on capital employed (ROCE), %||32.0||35.6||31.5|
|Equity ratio, %||53.2||48.3||49.2|
|Net debt / EBITDA (rolling 12 months)||0.34||0.25||0.03|
|Personnel at the end of the period||451||432||4||459|
|Brand sales 1||92.4||108.5||-15||280.8||298.6||-6||382.3|
|proportion of international sales, %||59||67||68||69||66|
|Number of stores||166||151||10||154|
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.
Tiina Alahuhta-Kasko, President and CEO, in conjunction with the report:
“Our good development continued in the third quarter. Our net sales grew both in Finland and internationally, and our operating profit improved. Nine Marimekko stores were opened in Asia. We are continuing the determined scaling up of our profitable growth.
Marimekko’s net sales for the third quarter increased by nine percent and amounted to EUR 47.9 million (44.1). The increase in net sales was driven particularly by growth in wholesale sales in all market areas. Global wholesale sales grew by 17 percent in total. Our omnichannel retail sales were on a par with the good level achieved in the comparison period. International net sales grew by 13 percent in July–September. In Finland, net sales increased by six percent as non-recurring promotional deliveries increased domestic wholesale sales.
In July–September, our comparable operating profit improved by 18 percent and reached EUR 13.1 million (11.1), representing 27.4 percent of net sales (25.2). Operating profit was boosted especially by the increased net sales, but also by the improved relative sales margin. We continued to make determined investments in growth in line with our strategy, which meant that our fixed costs increased as planned.
In January–September, our net sales grew by five percent and totaled EUR 123.5 million (118.1). Our comparable operating profit for the nine months was EUR 23.7 million (23.4), equaling 19.2 percent of net sales (19.8).
During the current strategy period of 2023–2027, Marimekko is focusing on scaling up its business and growth especially in the international markets. We approach our key markets through key cities. Our aim is to build an omnichannel ecosystem and a strong local Marimekko community in the key cities, which will enable us to reach consumers in their preferred channels and at important moments. In the third quarter, we strengthened our position particularly in Asia and Scandinavia.
In August, at Copenhagen Fashion Week, we presented our Spring/Summer 2024 collection, which celebrates the 60th anniversary of our most iconic and globally recognized print design, Unikko, designed by Maija Isola. The open-for-all outdoor fashion show in the inner courtyard of Designmuseum Danmark delighted a large group of friends of Marimekko, media representatives and industry professionals. In September, we opened our redesigned Stockholm flagship store, which represents our newest, dynamic store concept. After the review period, in October, we celebrated the opening of our Copenhagen flagship store. The Stockholm and Copenhagen stores are strategic investments that play an important role in building Marimekko’s brand awareness and positioning, as well as increasing omnichannel sales in Scandinavia.
The most important geographical area for our international growth during the strategy period is Asia. Growing markets, strong brand fit and the proven track record with the loose franchise partnership model create a good foundation for accelerating Marimekko’s omnichannel growth in Asia, where six Marimekko stores were already opened in the first half of the year. In the third quarter, nine new partner-owned Marimekko stores were opened in various locations in Asia. Three of the stores are located in Singapore and Vietnam, which are new markets for Marimekko. In addition, the first Marimekko store in Malaysia was opened after the review period. Singapore is an important global metropolis in South East Asia, and the brand’s presence there has a wider impact in Asia. Vietnam and Malaysia, in turn, are rapidly growing markets, and we believe that this is the right time to enter these markets offering interesting growth opportunities.
The positive development of our business has continued in spite of the weaker general market situation. Combined with our strong financial position, it enables us to make investments that strengthen our competitiveness and support our long-term growth. We believe that the brand’s desirability, strong commercial expertise and agility are ingredients for success even in the weakened general consumer demand climate. We are excited to continue building Marimekko’s future together with the constantly expanding Marimekko community, growing group of shareholders, our personnel and partners.”
Market outlook and growth targets for 2023
The uncertainties related to the general development of the global economy, such as the risk of an economic recession, general cost inflation, increasing interest rates, and the energy crisis as well as geopolitical tensions influence consumer confidence, purchasing power and behavior and, as a result, can have an impact on Marimekko’s business in 2023, especially in the important domestic market of Finland. Different exceptional situations, such as Russia’s war against Ukraine, 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 are expected to grow on the previous year. The Finnish wholesale sales in 2023 will be positively affected by non-recurring promotional deliveries, the total value of which is estimated to be substantially higher than the year before. A vast majority of the deliveries will take place in the second half of the year. Sales in Finland are strongly impacted by the general economic development, particularly the development of consumer confidence and purchasing power.
The Asia-Pacific region is Marimekko’s second-largest market and it plays a significant part in the company’s international growth. Japan is clearly the most important 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. Net sales in the Asia-Pacific region are expected to increase in 2023, as are total international sales. The aim is to open approximately 15 to 20 new Marimekko stores and shop-in-shops in 2023, and most of the planned openings will be in Asia.
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. In 2023, Marimekko’s net sales are expected to grow. As estimated, net sales in the first quarter of the year were lower than in the comparison period following the weaker outlook for the wholesale sales in Finland as well as lower licensing income. Furthermore, net sales in the first quarter of 2022 were boosted by some of the wholesale deliveries in the Asia-Pacific region in the fourth quarter of 2021 being transferred to the first quarter of 2022. For the full year 2023, licensing income is forecasted to grow from the record level of 2022.
The general cost inflation continues to also affect Marimekko in 2023. Marimekko’s early commitment to product orders from supplier partners, which is typical of the industry, means that changes in costs affect the company with a delay. These early commitments have been further emphasized by the exceptional situations, undermining 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 promotional deliveries also raise inventory risks. Marimekko works actively to ensure functioning production and logistics chains, to mitigate the negative impacts of generally increased costs, and to enhance inventory management.
Marimekko develops its business with a long-term view and aims to scale its growth especially in international markets during the strategy period of 2023–2027. In 2023, fixed costs are expected to be up on the previous year. Marketing expenses are expected to grow (2022: EUR 9.2 million).
Marimekko is closely monitoring the general economic situation and the development of consumer confidence and purchasing power, as well as the impacts of Russia’s war against Ukraine and possible other 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 8 November 2023 at 2.00 p.m. EET. A live webcast of the conference can be followed at https://marimekko.videosync.fi/2023-q3, and a recording of the webcast will be available at the same address later. Questions can be asked during the live webcast in writing.
Tiina Alahuhta-Kasko, President and CEO, tel. +358 9 758 71
Elina Anckar, CFO, tel. +358 9 758 7261
Tel. +358 40 5846944
Nasdaq Helsinki Ltd
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 2022, the company's net sales were EUR 167 million and comparable operating profit totaled EUR 30.4 million. Globally, there are roughly 150 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 460 people. The company’s share is quoted on Nasdaq Helsinki Ltd. www.marimekko.com
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