Marimekko gets Q1 boost but times are stil tough, targets digital and Asia Pac growth

By

Sandra Halliday

Published
May 10, 2017

Q1 delivered good news of a sort for Marimekko as the first three months of the year saw improved sales and earnings. But with the higher sales boosted by currency effects, it’s clear that the print and textile specialist still has work to do.

So what were the headline figures? Net sales rose 7% to €22.5m, much of that growth accounted for by a sales promotion that fell partly in Q1 this year but wholly in Q2 last year. International sales fell 2% to €10.7m and accounted for 47% of the total, down from 52% a year ago.

Comparable EBITDA rose 142% to €2m, but the operating result was down 1.1% to €0.9m and the operating margin fell 5.1% to 3.9%, although on a comparable basis it fell only 1.2% to 5%.

President and CEO Tiina Alahuhta-Kasko, acknowledged the boost that calendar effects gave to the quarter's results. But she also highlighted a 17% sales rise in Finland, improved operating results year-on-year, and the fact that Q1 net sales are typically low on a seasonal basis relative to operating costs. She said the overall state of the retail market in Finland is at last showing signs of improvement and that trade has gone into an upswing after several weaker years.

However, she added: “The trend is forecast to be modest [and] uncertainty in the global economy does not appear to be letting up this year either, partly due to the unpredictable political situation. It can also be seen that consumers in all markets are more price-conscious than before and, especially in Finland, price sensitivity in consumers' purchasing behaviour has increased during the past few years.”

So what is Marimekko doing to deal with all this? It is continuing its long-term development work related to the revamp of its collections and the brand.

Alahuhta-Kasko said it is making more commercial collections, especially in the area of ready-to-wear clothing and “I am confident that we are on the right track and that the work we are doing will improve our opportunities to respond to the needs of our international customer base even better than before.” It is also focusing on digital “as a great opportunity to our internationalising Marimekko, boosting both our products' availability and our brand profile.” The company expects its own webstore and other online sales channels to continue to grow. In January, it extended its e-commerce to 16 new countries and today it operates in 29 countries. The development of online business and multi-channel distribution will continue throughout this year.

But it is staying cautious on the 2017 outlook. “Retailers are exercising caution in their additional purchases and in selecting new suppliers, which is expected to impact Marimekko's wholesale sales,” the CEO said. Yet it has high hopes for the Asia-Pacific region, Marimekko's second-biggest market. While sales in the region this year are forecast to be roughly flat, it has a lot of potential for the future and most of the Marimekko stores and concessions to be opened in 2017 will be there.

Japan is the most important country in this region to the brand. The other countries' combined share of the company's net sales is still relatively small, as operations in these markets are in fairly early stages but it sees Australia as turning in fast growth. Japan has a very comprehensive network of Marimekko stores, and new ones are being opened at a rate of a few stores per year.

Also on the international front, royalty income from North America is expected to increase slightly due to a licensing agreement concluded with a North American company.