HALF-YEAR FINANCIAL REPORT OF MARIMEKKO CORPORATION, 1 January – 30 June 2024: Marimekko’s net sales continued to grow in the second quarter, operating profit slightly behind the comparison period but cumulative operating profit improved

Marimekko Corporation, Half-year Financial Report, 15 August 2024 at 8.00 a.m.

HALF-YEAR FINANCIAL REPORT OF MARIMEKKO CORPORATION, 1 January – 30 June 2024: Marimekko’s net sales continued to grow in the second quarter, operating profit slightly behind the comparison period but cumulative operating profit improved

This release is a summary of Marimekko’s half-year financial report for the January-June 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 second quarter in brief

• Marimekko’s net sales increased by 8 percent and totaled EUR 43.7 million (40.3). Net sales were boosted in particular by the growth of wholesale sales in Finland and Scandinavia as well as increased retail sales in Finland. 
• Net sales in Finland grew by 11 percent. Domestic wholesale sales grew mainly as a result of non-recurring promotional deliveries. Retail sales in Finland increased by 5 percent. International sales grew by 6 percent as, in addition to Scandinavian wholesale sales, retail sales grew in all market areas.   
• Operating profit was EUR 6.1 million (6.6). Comparable operating profit was slightly behind the strong comparison period and totaled EUR 6.4 million (6.8) equaling to 14.6 percent of net sales (16.8).  
• Higher fixed costs and weakened relative sales margin decreased operating profit in the second quarter of the year. On the other hand, increased net sales had a positive impact on operating profit. 

January–June in brief

• Company’s net sales grew by 8 percent and amounted to EUR 81.3 million (75.6). Net sales were boosted by increased wholesale and retail sales in Finland as well as growth in international sales. 
• Net sales in Finland increased by 9 percent due to, in particular, non-recurring promotional deliveries in wholesale sales and favorable development of retail sales. International sales grew by 6 percent bolstered by the wholesale sales in the Asia-Pacific region. 
• Operating profit improved to EUR 11.2 million (10.4) and comparable operating profit to EUR 11.6 million (10.6) equaling to 14.2 percent of net sales (14.0). 
• Operating profit was boosted especially by increased net sales. 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 Half-year Financial Report.  

Key figures 

(EUR million)	4–6/ 2024	4–6/ 2023	Change, %	1–6/ 2024	1–6/ 2023	Change, %	1–12/ 2023
Net sales	43.7	40.3	8	81.3	75.6	8	174.1
International sales	19.1	18.1	6	37.4	35.4	6	75.2
% of net sales	44	45		46	47		43
EBITDA	8.5	8.8	-4	15.8	15.0	6	40.6
Comparable EBITDA	8.7	9.0	-4	16.2	15.2	7	41.2
Operating profit	6.1	6.6	-7	11.2	10.4	8	31.4
Operating profit margin, %	14.0	16.4		13.8	13.8		18.0
Comparable operating profit	6.4	6.8	-6	11.6	10.6	9	32.0
Comparable operating profit margin, %	14.6	16.8		14.2	14.0		18.4
Result for the period	4.7	4.8	0	8.6	7.2	20	23.6
Earnings per share, EUR	0.12	0.12	0	0.21	0.18	20	0.58
Comparable earnings per share, EUR	0.12	0.12	1	0.22	0.18	22	0.59
Cash flow from operating activities	11.0	5.0	122	10.3	2.9		29.4
Gross investments	0.7	0.5	47	1.2	0.7	72	2.0
Return on capital employed (ROCE), %				38.5	34.4		33.0
Equity ratio, %				53.2	47.4		54.1
Gearing, %				6.8	32.7		-6.3
Net debt / EBITDA (rolling 12 months)				0.10	0.43		-0.10
Personnel at the end of the period				490	484	1	468
outside Finland				76	69	10	83
Brand sales 1	90.7	104.0	-13	190.5	188.5	1	376.7
outside Finland	59.9	76.8	-22	133.6	136.8	-2	249.0
proportion of international sales, %	66	74		70	73		66
Number of stores				166	157	6	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 Half-year Financial 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's net sales and operating profit grew during the first six months of the year. Impressive events and brand collaborations around the world increase our brand awareness and support our international growth strategy.

Marimekko’s net sales in the second quarter of 2024 increased by eight percent and amounted to EUR 43.7 million (40.3). Net sales were boosted especially by the growth of wholesale sales in Finland and Scandinavia, as well as increased retail sales in Finland. Marimekko’s retail sales grew in all market areas. In the important domestic market of Finland, we achieved a growth of five percent in retail sales despite the continued challenging market situation. Wholesale sales in Finland were strengthened by non-recurring promotional deliveries which, unlike in the comparison year, mainly took place in the first half of the year. Total net sales in Finland grew by 11 percent, while international net sales increased by six percent.

Our comparable operating profit for April–June amounted to EUR 6.4 million (6.8), representing 14.6 percent of net sales (16.8). Higher fixed costs and a lower relative sales margin decreased operating profit in the second quarter of the year. Our fixed costs were increased by, for example, planned investments in brand marketing to celebrate the 60th anniversary of the Unikko print. Cash flow from operating activities increased significantly and our financial position remained strong.

In January–June, our net sales increased by eight percent and totaled EUR 81.3 million (75.6). Our comparable operating profit for the first six months of the year improved by nine percent and amounted to EUR 11.6 million (10.6), representing 14.2 percent of net sales (14.0).

In May, our second limited-edition brand collaboration collection of the year with the global Japanese apparel retailer UNIQLO arrived in stores. Around the world widely available collaboration collections play a significant role in introducing new customers to Marimekko. In the second quarter, we also launched local brand collaborations with the Blue Bottle Coffee specialty coffee brand in Japan and the Heytea chain, focusing on new tea beverages, in China, and announced a silver jewelry collection created in partnership with the Finnish company Kalevala Jewelry. The collection will celebrate the Unikko print design and become available in the fall. These types of local brand collaborations deepen our relationship with the Marimekko community in different countries and help us build our brand awareness in a more targeted manner in the Asian markets, for example.

The store network in Asia also developed further during the second quarter. During the first months of the year, Marimekko changed its loose-franchise partner responsible for the Taiwanese market to Imaginex, a leading partner in the region. As a result of the change in partner, the store network in Taiwan will be fully revamped in 2024. In the second quarter, three Marimekko stores were opened in Taipei and one in Tainan. In Singapore, a partner-operated Marimekko webstore and another online platform were opened. In addition, the store network in Japan grew by one Marimekko store and six pop-up stores delighted customers across the country.

The 60th anniversary of the Unikko print design showed strongly in our main markets in the second quarter. In April, the iconic print was celebrated at Milan Design Week at the Bar Unikko pop-up café, which garnered one of the highest earned visibilities of the design week's events. In May, the traditional Marimekko Day fashion shows held in Esplanade Park in Helsinki drew large crowds of friends of our brand to enjoy summer fashion in the spring sunshine. To mark the special anniversary, this year the popular event also travelled to Shanghai as well as to Tokyo, where we invited our community to an open fashion show for the first time. Our public fashion shows reflect our inclusive approach to design and showcase values important to Marimekko: a sense of community, equality and inclusion. The anniversary of Unikko, our most internationally renowned print design, provides us with an exceptional opportunity to expand our customer base through brand marketing and bring color and joy to our community around the world in various surprising ways.

I want to take this opportunity to extend my warmest thanks to all of Marimekko's personnel and our partners for their excellent work in the first half of the year. Our continued profitable growth in spite of the prolonged weaker general market situation speaks to the desirability of our brand and the strong competitiveness of our company. We are in a good position to continue our determined efforts to scale up the global Marimekko phenomenon."

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 15 August 2024 at 2.00 p.m. EEST. A live webcast of the conference can be followed at https://marimekko.videosync.fi/q2-2024, 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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• Marimekko_Half-year_Financial_Report_2024