Marimekko Corporation, Interim Report, 13 May 2022 at 8.00 a.m.
INTERIM REPORT OF MARIMEKKO CORPORATION, 1 January–31 March 2022: Marimekko’s net sales and result continued to grow in the first quarter of 2022
This release is a summary of Marimekko’s interim report for the January-March period of 2022. 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 grew by 24 percent to EUR 36.0 million (29.1). In Finland, net sales rose by 27 percent, while international net sales grew by 20 percent.
- Net sales were boosted both by a favorable trend in wholesale and retail sales in Finland as well as the good development of international net sales with sales growing in all market areas.
- As in the comparison period, nearly all of Marimekko’s own stores were open in the first quarter, and the footfall in the stores grew clearly from the comparison period, when the pandemic situation had a stronger impact on footfall.
- Operating profit improved to EUR 6.6 million (5.6). Comparable operating profit grew by 18 percent to EUR 6.6 million (5.6) and was 18.4 percent of net sales (19.3).
- Earnings were boosted especially by increased net sales. On the other hand, an increase in fixed costs as well as lower relative sales margin had a weakening impact on result.
- The Annual General Meeting decided to pay a regular dividend of EUR 1.60 per share and an extraordinary dividend of EUR 2.00 per share for 2021. The dividend was paid on 25 April 2022.
- In addition, the AGM decided on issuance of shares without payment (split) to enhance the liquidity of the company’s shares. New shares were issued to the shareholders without payment in proportion to their holdings so that four (4) new shares were issued for each share. The new shares were registered in the trade register on 14 April 2022 and the trading with the new shares began on 19 April 2022.
Financial guidance for 2022
The Marimekko Group's net sales for 2022 are expected to grow from the previous year (2021: EUR 152.2 million). Comparable operating profit margin is estimated to be approximately some 17–20 percent (2021: 20.5 percent). Global supply chain disruptions and generally increased material and logistics costs in particular cause volatility to the outlook for 2022.
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 this Interim Report.
Key figures
| (EUR million) | 1–3/ 2022 | 1–3/ 2021 | Change, % | 1–12/ 2021 |
| Net Sales | 36.0 | 29.1 | 24 | 152.2 |
| International sales | 17.5 | 14.6 | 20 | 59.9 |
| % of net sales | 49 | 50 | 39 | |
| EBITDA * | 9.1 | 8.6 | 6 | 43.1 |
| Comparable EBITDA * | 9.1 | 8.6 | 6 | 43.1 |
| Operating profit * | 6.6 | 5.6 | 18 | 31.2 |
| Operating profit margin, % * | 18.4 | 19.3 | 20.5 | |
| Comparable operating profit * | 6.6 | 5.6 | 18 | 31.2 |
| Comparable operating profit margin, % * | 18.4 | 19.3 | 20.5 | |
| Result for the period * | 5.0 | 4.4 | 14 | 24.4 |
| Earnings per share, EUR *, ** | 0.12 | 0.11 | 14 | 0.60 |
| Comparable earnings per share, EUR *, ** | 0.12 | 0.11 | 14 | 0.60 |
| Cash flow from operating activities * | -3.1 | 1.5 | 35.9 | |
| Return on investment (ROI), % * | 35.2 | 29.0 | 33.0 | |
| Equity ratio, % * | 57.2 | 46.8 | 53.3 | |
| Net debt / EBITDA (rolling 12 months) | -0.31 | 0.08 | -0.64 | |
| Gross investments * | 0.1 | 0.4 | -61 | 0.2 |
| Personnel at the end of the period | 409 | 416 | -2 | 409 |
| outside Finland | 74 | 79 | -6 | 69 |
| Brand sales 1 | 88.3 | 67.4 | 31 | 375.6 |
| outside Finland | 61.8 | 46.8 | 32 | 247.6 |
| proportion of international sales, % | 70 | 69 | 66 | |
| Number of stores | 147 | 154 | -5 | 152 |
* The quarterly figures for comparable period have been restated as the accounting principle changed in 2021 following the IFRS Interpretations Committee agenda decision. Additional information is presented in the accounting principles of this Interim Report.
** Per-share key figures have been calculated and the figures for the comparable period have been restated using the new total number of shares following the issuance of shares without payment (share split), in accordance with the decision made by the AGM on 12 April 2022.
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.
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. At the beginning of 2021, the coefficients used to calculate brand sales were adjusted, and the figures for the comparison year have been restated accordingly. 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:
“Marimekko’s good development continued in the first quarter of 2022. Our net sales grew and our operating profit improved.
The strong development of our business is based on the constantly growing desirability of our brand – which we develop with a long-term approach – as well as collections that appeal to our customers and the increasingly agile operating methods we have adopted over the past few years, among other factors. Our strengthened competitiveness and profitable growth are the result of excellent work done by everyone at Marimekko.
In January–March, our net sales increased by 24 percent to EUR 36.0 million (29.1). Growth was driven both by higher wholesale and retail sales in Finland as well as the positive development of international net sales, with sales growing in every market area. Our omnichannel retail sales grew by 22 percent, while wholesale sales increased by 23 percent.
Our comparable operating profit, which rose to EUR 6.6 million (5.6) in January–March, was boosted in particular by increased sales. To reinforce our long-term international growth, during the review period we invested in areas such as increasing Marimekko’s brand awareness, digital business and IT systems, as well as recruitments that support growth. As planned, this raised our fixed costs in the first quarter. In addition to our investments in growth, our costs in 2022 are also being increased by the general rise in material and logistics costs as well as the global supply chain disruptions that are still caused by the pandemic and made worse by the war in Ukraine, which touches all of us on a human level. Russia’s attack on Ukraine has deeply shocked all of us at Marimekko, and our thoughts are with the people of Ukraine. We try to help them with our small contribution.
In February, we presented our winter 2022 collection at Copenhagen Fashion Week. The collection was designed with a focus on combinability and layering. Improved combinability between seasons and the new block fits and archetype silhouettes that draw inspiration from our archives further strengthen the timelessness and sustainability of Marimekko’s design. We also took our first steps toward a value chain that is in line with the principles of the circular economy when, at the beginning of the year, we started a cooperation concerning the recycling of end-of-life textiles. Rester Oy’s recycling facility in Paimio, Finland, makes new textile fibers from the end-of-life-textiles of Marimekko’s own production, i.e. from the textile printing factory and sewing shop in Helsinki.
In March, we announced our third limited-edition collection with adidas, a global leader in the sporting goods and apparel industry. The collection, which launched in April, further increases Marimekko’s brand awareness internationally and thereby supports our international growth strategy. Furthermore, we joined forces in the Chinese market with a local lifestyle brand, the Beast, to launch a limited-edition collection of home products as well as Marimekko’s first perfume. In addition to global brand partnerships that provide us with extensive visibility, these types of targeted local collaborations are an important way to introduce more and more new audiences to Marimekko.
In 2022, we are continuing our efforts to accelerate our long-term international growth. As our business model and strategy of profitable growth do not tie up significant amounts of capital, and because the company’s financial position is strong, the Annual General Meeting held after the review period decided to distribute an extraordinary dividend in addition to the regular dividend for the financial year 2021. The AGM also resolved to carry out a share issue without payment, directed to the company’s shareholders. The number of shares increased fivefold as a result of the share issue. The purpose of the share split is to enhance the liquidity of the company’s shares.
After the review period, we have already announced upcoming brand collaborations with IKEA and the modern luxury brand Mansur Gabriel, for example. Marimekko is moving ahead systematically with the execution of the company’s strategy of profitable growth. We are pleased that our loyal long-term customers, the many new friends of Marimekko and our growing group of shareholders have decided to join us on this inspiring journey.”
Market outlook and growth targets for 2022
The coronavirus pandemic has been the worst crisis experienced by the global fashion industry and specialty retail sector in decades, and it will impact the sector in 2022 as well. The development of the pandemic situation in different markets, political tensions, and increased inflation impact the global economic trend as well as consumers’ purchasing behavior and, as a result, can have an impact on Marimekko’s business. The war in Ukraine does not directly affect Marimekko’s business as Marimekko’s products are not manufactured or sold in Russia, Belarus or Ukraine and the company does not source raw materials from these countries. However, the war in Ukraine causes disturbances in global supply chains and contributes to the general economic situation and consumers’ buying power and behavior. These factors may affect company’s sales and profitability as well as operational reliability and efficiency of the company’s value chain.
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 total value of nonrecurring promotional deliveries in wholesale in 2022 is estimated to be substantially lower than the year before.
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. The other Asian countries’ combined share of the company’s net sales is still smaller than in Japan, but operations in these countries are constantly growing. 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 clearly in 2022. The aim is to open approximately 5 to 10 new Marimekko stores and shop-in-shops in 2022, and most of the planned openings will be in Asia.
Marimekko estimates that both retail and wholesale sales will increase in 2022. Licensing income is also forecasted to be higher than in the previous year. Marimekko will continue actions to control gray exports, but these actions will have a significantly lower weakening impact on the company’s sales and earnings in 2022 than in the previous year. Because of the seasonal nature of Marimekko’s business, the major portion of the company’s euro-denominated net sales and earnings are traditionally generated during the second half of the year. In percentage terms, net sales growth is expected to be stronger at the beginning of 2022 than in the second half of the year. In 2021, the pandemic situation had a negative impact on the footfall in Marimekko's own stores at the beginning of the year and the net sales in the second half of the year were supported, for example, by substantial nonrecurring promotional deliveries in wholesale in Finland.
The coronavirus pandemic, related restrictions and the war in Ukraine cause disruptions in global supply chains. These disruptions have resulted in delivery delays, and thus can impact Marimekko’s net sales and profitability. In addition, disruptions in supply chain increase logistics costs, which have also grown overall worldwide. Furthermore, net sales and earnings essentially depend on maintaining the operational reliability and efficiency of distribution centers and logistics in the exceptional situation. Costs of raw and other materials have increased globally. Early commitment to product orders, which is typical of the fashion and design industry, means that changes in raw and other material prices affect the company with a delay. In addition, the early commitment to product orders, further emphasized in the pandemic situation, undermines the company’s ability to optimize product orders and respond to rapid fluctuations in demand, especially in exceptional situations. Marimekko is actively working on mitigating disruptions in supply chain and the negative effects of increased costs.
Marimekko continues to accelerate its long-term international growth. In 2022, it will invest especially in increasing brand awareness, in digital and omnichannel business, in developing sustainability, in recruitments supporting its growth as well as in IT systems. Fixed costs are expected to be up on the previous year. In 2021, fixed costs were still reduced by partly temporary cost savings. Marketing expenses are expected to grow (2021: EUR 7.5 million).
Marimekko is closely monitoring the impacts of the war in Ukraine and the coronavirus pandemic and will adjust its operations and plans according to the situation.
Media and investor conference
A conference for media and institutional investors will be held in English on 13 May 2022 at 2.00 p.m. EEST. A live webcast of the conference can be followed at https://marimekko.videosync.fi/2022-q1-results/register, 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 2021, the company's net sales were EUR 152 million and brand sales of the products worldwide amounted to EUR 376 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 410 people. The company’s share is quoted on Nasdaq Helsinki Ltd. www.marimekko.com
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