FINANCIAL STATEMENTS BULLETIN OF MARIMEKKO CORPORATION, 1 Jan–31 Dec 2023: Marimekko’s net sales grew and operating profit improved further in the fourth quarter

Marimekko Corporation, Financial Statements Bulletin, 15 February 2024 at 8.00 a.m.

FINANCIAL STATEMENTS BULLETIN OF MARIMEKKO CORPORATION, 1 Jan–31 Dec 2023: Marimekko’s net sales grew and operating profit improved further in the fourth quarter

This release is a summary of Marimekko’s financial statements bulletin for the January-December 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 fourth quarter in brief

Marimekko’s net sales increased by 5 percent and totaled EUR 50.6 million (48.4). The increase in net sales was driven particularly by the growth in international sales but also by the positive development of Finnish retail sales.
Net sales in Finland grew by 2 percent as retail sales increased. International sales grew by 10 percent as especially wholesale sales developed favorably both in the Asia-Pacific region and North America and licensing income grew.
Operating profit was EUR 8.1 million (6.8) and comparable operating profit totaled EUR 8.3 million (6.9) equaling to 16.4 percent of net sales (14.3).
Operating profit was boosted especially by increased net sales but also improved relative sales margin. On the other hand, an increase in fixed costs had a weakening impact on operating profit.

Year 2023 in brief

Company’s net sales grew by 5 percent and amounted to EUR 174.1 million (166.5). Net sales were boosted in particular by increased international wholesale sales but also by the good development in Finnish retail sales.
Marimekko’s international sales in 2023 grew by 10 percent. Net sales in Finland increased by 1 percent.
Operating profit was EUR 31.4 million (30.2) and comparable operating profit totaled EUR 32.0 million (30.4) equaling to 18.4 percent of net sales (18.2).
Operating profit was improved especially by increased net sales. On the other hand, higher fixed costs decreased operating profit. Improved relative sales margin had a positive effect on the operating profit.

Board’s proposal for dividend

The Board of Directors will propose to the Annual General Meeting that a dividend of EUR 0.37 will be paid for 2023, with 18 April 2024 as the dividend payout record date and 25 April 2024 as the dividend payout date.

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 Financial Statement Bulletin.

Key figures

(EUR million)	10–12/ 2023	10–12/ 2022	Change,%	1–12/ 2023	1–12/ 2022	Change, %
Net sales	50.6	48.4	5	174.1	166.5	5
International sales	20.1	18.4	10	75.2	68.3	10
% of net sales	40	38		43	41
EBITDA	10.4	9.2	14	40.6	39.9	2
Comparable EBITDA	10.6	9.3	14	41.2	40.0	3
Operating profit	8.1	6.8	19	31.4	30.2	4
Operating profit margin, %	15.9	14.0		18.0	18.2
Comparable operating profit	8.3	6.9	19	32.0	30.4	5
Comparable operating profit margin, %	16.4	14.3		18.4	18.2
Result for the period	6.1	4.0	51	23.6	22.7	4
Earnings per share, EUR	0.15	0.10	51	0.58	0.56	4
Comparable earnings per share, EUR	0.15	0.10	51	0.59	0.56	6
Cash flow from operating activities	21.0	11.7	79	29.4	20.1	46
Return on capital employed (ROCE), %				33.0	31.5
Equity ratio, %				54.1	49.2
Net debt / EBITDA (rolling 12 months)				-0.10	0.03
Gross investments	0.9	0.2		2.0	1.0	104
Personnel at the end of the period				468	459	2
outside Finland				83	76	9
Brand sales ¹	95.9	83.7	15	376.7	382.3	-1
outside Finland	57.5	45.4	27	249.0	251.9	-1
proportion of international sales, %	60	54		66	66
Number of stores				167	154	8

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 Financial Statements Bulletin.

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:

“Marimekko’s net sales continued to grow, and our operating profit improved. International sales grew clearly. Our determined work to scale up our profitable growth will continue in 2024 in spite of the weaker general market situation.

Marimekko’s net sales for the fourth quarter increased by five percent and amounted to EUR 50.6 million (48.4). Net sales were boosted especially by international net sales, which increased by 10 percent. The growth of international net sales was driven particularly by the good development of wholesale sales in the Asia-Pacific region and North America, as well as increased licensing income. We also increased our net sales in Finland by two percent, which represents good performance in this challenging general market situation and highly tactical business environment. I want to take this opportunity to extend my warmest thanks to the entire Marimekko personnel as well as our partners around the world for their excellent work in 2023.

The good development of net sales improved our operating result, with our comparable operating profit rising by 19 percent in October–December to EUR 8.3 million (6.9), representing 16.4 percent of net sales (14.3). Operating profit was also increased by the improved relative sales margin. We systematically continued to make investments in growth in line with our strategy, which meant that our fixed costs increased as planned.

Our full-year net sales for 2023 grew by five percent and totaled EUR 174.1 million (166.5). International sales increased by 10 percent and net sales in Finland by 1 percent. Our comparable operating profit amounted to EUR 32.0 million (30.4) and represented 18.4 percent of net sales (18.2). Cash flow from operating activities also developed favorably, and Marimekko’s financial position remained strong.

In the fourth quarter, we continued to strengthen our position in the international markets, particularly in Asia and Scandinavia. In Malaysia, which is one of Marimekko’s three new markets entered in 2023 and operated by loose-franchise partners, two new Marimekko stores were opened in Kuala Lumpur. In Copenhagen, we opened a flagship store that represents our newest, dynamic store concept. A total of 19 new Marimekko stores or shop-in-shops were opened during the year, with 17 of them in Asia. We also completely redesigned our Stockholm flagship store in 2023. In addition to permanent retail locations, visibility to our brand was brought by 11 pop-up stores during the year, with one in Seoul and another in Hong Kong in the fourth quarter. Limited-edition brand collaboration collections with leading brands in their respective industries, such as with adidas and IKEA in 2023, also play an important role in increasing Marimekko’s international brand awareness.

During the strategy period of 2023–2027, Marimekko is focusing on scaling up its business and growth especially in the international markets. The growth of international net sales, the development of the store network, new digital sales channels and interesting collaborations are concrete proof of the progress of our strategy in 2023. In 2024, we are celebrating the 60th anniversary of our most renowned print design, Unikko, designed by Maija Isola. Unikko will appear in, for example, special collections and various events around the world during the year. This will provide us with excellent opportunities to continue our determined efforts to introduce new audiences to Marimekko, deepen our relationship with the Marimekko community, and scale up our profitable growth despite the market situation.”

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, such as Russia’s war in Ukraine and shipping disruptions on the Red Sea, 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. In addition, the size and timing of non-recurring promotional deliveries in wholesale create volatility to Finnish sales estimate. 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.

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 2024, Marimekko’s net sales are expected to grow. Net sales in the first quarter of the year are estimated to be approximately at the level of the previous year, as wholesale sales, for example, will be partly impacted by some of the wholesale deliveries in Finland in the first quarter of 2024 being transferred to the fourth quarter of 2023.

Licensing income in 2024 is forecasted to be approximately at the previous year’s record level.

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 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 inventory management and relative profitability. The domestic non-recurring wholesale promotional deliveries also raise inventory risks. 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 conference for media and institutional investors will be held in English on 15 February 2024 at 2.00 p.m. EET. A live webcast of the conference can be followed at https://marimekko.videosync.fi/q4-2023, 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 35 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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