Marimekko Corporation, Stock Exchange Release 5.2.2014 at 8.25 AM
Marimekko is planning to carry out a reorganisation of its operations, which is expected to result in the elimination of an estimated maximum of 65 jobs in Finland and the United States. If implemented to its full extent, the reorganisation will yield annual savings in costs estimated at roughly 2.5 million euros and an improvement in operating result. Marimekko has also decided to initiate an international recruitment process to seek a new Creative Director for the company.
In accordance with its strategy, Marimekko has undergone a dynamic phase of internationalisation and change in the past five years. The product distribution network has been greatly expanded in all of the company's main market areas: in the past three years, the number of Marimekko stores has grown by around 60 percent and the number of company-owned stores has almost doubled. New markets have been opened up in South Korea, China, Hong Kong, Taiwan and Mexico.
“In recent years, we have taken several very significant steps in our internationalisation for a company of our size. In spite of the difficult state of the global economy, we have built Marimekko into a global design company with already more than 130 stores in Asia, Europe and North America. It is now time to move into the next stage of our strategy, in which we seek a significant improvement in profitability at the same time as our growth continues,” says Mika Ihamuotila, President and CEO.
“We are reorganising our operations to strengthen the competitiveness of our business in the long term, and our goal is a more efficient organisational structure. Unfortunately, this will mean initiating consultative negotiations in Finland and reorganisations in the United States as well. We also want to create even more attractive products for our international customer base. For this reason, we are reinforcing our design unit by seeking a new Creative Director with international experience,” says Mika Ihamuotila, President and CEO.
Consultative negotiations and reorganisation
Marimekko will initiate consultative negotiations on all operations in Finland with the exception of the personnel at the textile printing factory in Helsinki. Reorganisations will also be carried out in the United States. The planned actions are expected to result in an estimated reduction of a maximum of 65 personnel in Finland and the United States. The other offices outside Finland are not within the scope of the reorganisations.
In Finland, the need to downsize personnel is estimated at a maximum of 55 employees. In addition, part of the jobs in company-owned stores may be converted to part-time positions or the agreed number of working hours may be reduced as a result of the planned reorganisations. During the consultative negotiations, it will be determined whether part of any personnel reductions could take the form of pension arrangements or similar. At the end of 2013, Marimekko had 502 employees, 378 of whom worked in Finland. The stores had 248 employees, 151 of whom were in Finland.
The expansion of business in North America and the opening of company-owned stores in the United States made it necessary to establish a new country organisation in 2011. In the initial stage of the expansion, the country organisation was led by the brand management specialist C2Group, whose contract expired at the end of 2013. At the same time, a new country manager started with the company. In the next few years, the main thrust will be on expanding wholesale, and the country organisation will be adapted to this goal.
Marimekko has six company-owned stores in the United States which are still partly in the launching phase. The purpose of the stores is also to reinforce the brand and to attract the interest in the company's products of high-quality department stores and other retailers. Effort was put into developing the stores' business last year, but in some of the stores improving profitability has proven more challenging than forecast and sales have been weaker than expected. Marimekko is negotiating for the termination of the lease on the store in Beverly Hills and examining the possibility of moving the store to a new location with better accessibility for the target public.
In the United States, the planned arrangements are estimated to result in eliminating a maximum of 10 jobs in the Beverly Hills store and the country organisation. At the end of 2013, Marimekko had 55 employees in the United States.
“I am satisfied that our own stores in the United States have fulfilled their important role as brand builders, have helped open doors to high-class department stores and forge new partnerships both in North America and in other international markets. Developing the business of the stores requires us to take the long perspective and this year we are continuing this work. In the next few years, the focus of our expansion in North America will be on developing shop-in-shop partnerships,” says Mika Ihamuotila.
International search for Creative Director
Design is the core of Marimekko's business. As part of a broader review of operations, Marimekko has made the decision to initiate an international recruitment process for a new Creative Director for the company. The aim is to reinforce the international competitiveness of Marimekko's design management. The current Creative Director Minna Kemell-Kutvonen resigns her membership of the company’s Management Group as of 5 February 2014 and continues with the company in other design-related executive duties which will be specified later. For the duration of the recruitment process, Chief Marketing Officer Tiina Alahuhta-Kasko will handle the duties of the Creative Director with the assistance of Kemell-Kutvonen.
Press conference
A press conference on this stock exchange release and on the financial statements bulletin will be held for the media and analysts today, starting 9.00 a.m., at Marimekko's flagship store in Helsinki at Pohjoisesplanadi 33.
Further information
Address requests for interviews to Merja Paulamäki, Communications & IR Manager,
tel. +358 9 758 7473.
MARIMEKKO CORPORATION
Corporate Communications
Piia Kumpulainen
Tel. +358 9 758 7293
piia.kumpulainen@marimekko.fi
DISTRIBUTION:
NASDAQ OMX Helsinki Ltd
Key media
Marimekko is a Finnish textile and clothing design company renowned for its original prints and colours. The company designs and manufactures high-quality interior decoration items ranging from furnishing fabrics to tableware as well as clothing, bags and other accessories. When Marimekko was founded in 1951, its unparalleled printed fabrics gave it a strong and unique identity. Marimekko products are sold in approximately 40 countries. In 2012, brand sales of Marimekko products worldwide amounted to approximately EUR 187 million and the company's net sales were EUR 88 million. The number of Marimekko stores totalled 108 at the year end. The key markets are North America, Northern Europe and the Asia-Pacific region. The Group employs around 500 people. The company’s share is quoted on NASDAQ OMX Helsinki Ltd. www.marimekko.com