Marimekko |

A Finnish design house aiming to grow globally

| Finland

Financial overview

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Marimekko - Domestic market presents challenges

16.02.2024 | Company update

Marimekko’s Q4 figures missed our estimates for net sales and adj. EBIT. While the performance was a slight letdown, we expect profitable growth to continue, although at a slightly slower pace as the domestic market presents challenges.

Lower than estimated domestic sales drove the earnings miss

Marimekko delivered Q4 figures that were lower than estimated for both net sales and EBIT. Net sales grew by 5% to EUR 50.6m in Q4 (52.9/53.6m Evli/cons.). Clear disappointment on the net sales side was domestic wholesale, which missed our estimates by a large margin. On the other hand, APAC kept delivering growth as we had estimated. Adj. EBIT amounted to EUR 8.3m (9.0/8.7m Evli/cons.), reflecting a margin of 16.4% while we had estimated adj. EBIT margin of 17.1%. The lower profitability was largely driven by the volume miss due to operational leverage.

 

Two-sided development of Q4 expected to continue in 2024

 

Marimekko expects its net sales to grow in 2024 while adj. EBIT margin is estimated to be 16-19%. The two main drivers for Marimekko, Finland and APAC developed in different directions during Q4, we estimate this to continue to 2024. In 2024, Marimekko aims to open 10-15 new stores and shop-in-shops, and most of the planned openings will be in Asia. Due to the difficult market environment, net sales in Finland are expected to be approximately at the level of 2023. We previously estimated growth of 1.7% y/y in Finland for 2024, with our updated estimates, we drop our growth estimate to 0.7%. For APAC, we have also dropped our growth estimate slightly yet still estimate healthy growth of 12.3% y/y. After the adjustments, our net sales estimate is now at EUR 181.9m (prev. EUR 188.3m). With slower growth and higher fixed costs, we estimate EUR 33.0m adj. EBIT for 2024 (prev. EUR 35.3m) with a margin of 18.2%.

 

HOLD with a TP of EUR 11.5 (12.0)

Based on our updated estimates for 24-25E, Marimekko is priced at roughly 14-13x EV/EBIT and 19-17x P/E. The pricing is roughly at par compared to our premium and luxury goods peer groups which trade at 14-13x EV/EBIT and 18-17x P/E (avg. between the peer groups).

Marimekko - Another solid year in the books

15.02.2024 | Earnings Flash

Marimekko’s Q4 net sales and adj. EBIT missed our estimates slightly yet the story continued to develop favorably with strong intl. growth and solid margins.

  • Group result: driven by strong wholesale development especially in APAC and NA, Q4 net sales grew by 5% to EUR 50.6m (52.9/53.6m Evli/cons.), slightly lower than out estimates. Domestic retail was surprisingly strong with growth of 3% y/y, on the other hand domestic wholesale missed our estimates as the sales declined by 2%. Gross margin came in lower than expected as on the other hand, it was supported by higher licensing income and lower transport cots as expected while higher discounts affected it negatively. Adj. EBIT amounted to EUR 8.3m (9.0/8.7m Evli/cons.), reflecting a margin of 16.4%. Adj. EPS came in at EUR 0.15 (0.18/0.17 Evli/cons.).
  • Finland: topline grew 2% to EUR 30.5m (Evli est. EUR 31.9m) supported by retail sales while wholesale sales decreased 2%.
  • Int’l: growth was strong at 10% y/y yet slightly below our estimate. Growth was supported by wholesale especially in APAC and NA.
  • 24 market outlook: 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. 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. Marimekko aims to open roughly 10-15 new Marimekko stores and shop-in-shops, most of the planned openings will be in Asia (19 openings in 23, of which 17 in Asia).
  • 24 guidance: Net sales to grow and adj. EBIT margin between 16-19%.

Marimekko - Expecting a solid finish to the year

08.02.2024 | Preview

Marimekko reports its Q4 results on 15th of February. We anticipate that higher licensing revenue and increased sales from both domestic and global wholesale have sustained profitable growth.

Wholesale drives volumes, licensing supports margins

Marimekko executed its strategy according to the plan during Q3 as the company’s growth was strong internationally driven by strong wholesale sales especially in APAC, NA and Scandinavia. With the higher volumes and improved gross margin, the company’s adj. EBIT came in at EUR 13.1m, above our estimate of EUR 12.6m. We have made only cosmetic changes to our estimates ahead of Q4/23 report. We estimate net sales of EUR 52.9m for Q4/23 (EUR 48.4m Q4/22). For Finland, we expect retail to continue to decline while wholesale volumes are supported by the non-recurring promotional deliveries. Our estimates are similar for other Western markets, although we also expect retail growth for North America and EMEA. For APAC, we expect continued growth driven by the loose franchise store openings. In terms of profitability, we estimate EBIT of EUR 9.0m (Q4/22 EUR 6.9m) with a margin of 17.1% (14.3%) driven by increased volumes, higher licensing sales and lower logistics costs.

 

Outlook of key interest as domestic market remains weak

In addition to Q4 figures, our interest lies on the outlook for 2024. For the Asian market, our main interest is on the number of new stores expected to be opened in 2024. The domestic market appears rather weak still as Finnish consumer confidence remained low during Q4 2023 as spending and intentions to make large purchases were low. In addition, data from domestic Christmas sales for fashion products was weak. On a positive note, consumer confidence improved slightly in January.

 

Pricing leans towards the higher end of the valuation range

Based on our estimates for 23-24E, Marimekko is priced at roughly 16-15x EV/EBIT and 22-19x P/E. We base our valuation between the company’s premium and luxury good peer groups which trade at 23-24E avg. EV/EBIT of 15-13x and avg. P/E of 19-18x. While still fair, the valuation is starting to look elevated. We retain our rating at HOLD with a TP of EUR 12.0 (EUR 11.0).

Marimekko - Scaling according to the plan

09.11.2023 | Company update

Marimekko reported Q3 figures that were largely in line with our estimates. We estimate that the company’s current good form will continue to Q4. While the soft domestic market poses challenges for 2024, expected international profitable growth, particularly in the APAC region, is anticipated to support overall performance.

Q3 figures were in line with our estimates

Driven by strong wholesale sales development across the globe, Marimekko’s net sales grew 9% y/y to EUR 47.9m, in line with our estimates (48.5/49.3m Evli/cons.). Int’l sales grew 13% y/y driven by strong wholesale sales especially in APAC, NA and Scandinavia. Finnish retail sales declined by 1% y/y while the non-recurring promotional deliveries supported domestic wholesale figures which grew 18% y/y. Despite the wholesale driven growth, Marimekko’s gross margin improved slightly supported by lower transport costs. The company’s fixed costs kept increasing yet higher volumes and improved gross margin boosted adj. EBIT to EUR 13.1m (12.6/12.8m Evli/cons.), fairly well in line with our estimates.

 

Profitable growth supported by int’l areas going forward

Even with the growth driven by wholesale sales, the company managed to improve its gross margin y/y. Furthermore, the company's EBIT margin saw an uptick due to sales growth, demonstrating the scalable nature of Marimekko's business model and its loose franchise model in Asia. The Finnish consumer confidence has continued to weaken during Q3 and start of Q4 and is currently clearly below the long-term average. We have revised our sales growth estimates upwards for Q4 and 2024 in int’l areas, on the other hand, we have lowered our net sales estimates for Finland. Our updated estimate for FY 2023 net sales is at EUR 176.6m (prev. EUR 178.1m) and adj. EBIT at EUR 33.1 (prev. EUR 32.9m) with adj. EBIT margin of 18.8% (prev. 18.5%).

 

HOLD with a TP of EUR 11.0 (10.5)

With only slight adjustments to our estimates, we continue to consider Marimekko’s valuation neutral. The company trades between our premium (32% premium on 2023E EV/EBIT basis) and luxury goods (7% discount) peer groups. We adjust our TP to EUR 11.0 (EUR 10.5) with HOLD-rating intact.

Marimekko - Well in line with expectations

08.11.2023 | Earnings Flash

Marimekko reported Q3 results well in line with our estimates. Both revenue and profitability were fairly in line while the margin was touch above our estimate. The guidance for 2023 was reiterated and the market outlook implies growth to continue in all of Marimekko’s main markets.

  • Group result: driven by strong wholesale development globally, Q3 net sales grew by 9% to EUR 47.9m (48.5/49.3m Evli/cons.), roughly in line with our expectations. Finnish sales were supported by non-recurring promotional deliveries as expected while domestic retail declined by 1% y/y. Gross margin improved slightly supported by lower transport costs. Despite increased fixed costs, higher volumes and improved gross margin boosted adj. EBIT above the comparison period. Adj. EBIT amounted to EUR 13.1m (6/12.8m Evli/cons.), reflecting a margin of 27.4%. Adj. EPS came in at EUR 0.26 (0.25/0.24 Evli/cons.).
  • Finland: topline increased by 6% to EUR 28.2m, which was a touch below our estimates (Evli: 29.5m). The growth was driven by non-recurring promotional wholesale deliveries as expected while domestic retail declined by 1% y/y.
  • Int’l: net sales came in strong, slightly above our expectations. Topline grew by 13% to EUR 19.7m (Evli: 19.1m). The growth was supported by strong wholesale growth across the globe.
  • 23 market outlook: Marimekko expects its domestic sales to grow, and one-off wholesale deliveries to support Finnish sales development in H2. The APAC region and Int’l net sales are expected to grow. The aim is to open roughly 15-20 new Marimekko stores and shop-in-shops in 2023, and most of the planned openings will be in Asia.
  • 23 guidance intact: Net sales to grow and adj. EBIT margin between 16-19%.

Marimekko - Expecting profitable growth

06.11.2023 | Preview

Marimekko reports its Q3 result 8th of November. We expect pick-up in growth driven by strong overall momentum outside Finland, new store openings and domestic non-recurring wholesale deliveries.

First half of the year was still relatively slow

Marimekko’s revenue grew 2% to EUR 75.6m (H1/22 EUR 74.0m) during the first half of 2023. The company’s growth slowed down during the first half driven by the slowdown in the domestic wholesale business and a tough comparison period. Gross margin was roughly in line with the comparison period at 62.1% (62.8% in H1/22). Comparable EBIT decreased to EUR 10.6m (EUR 12.3m in H1/22) with comparable EBIT margin of 14.0% (16.6% in H1/22) driven by higher fixed costs and lower volumes in Q1. In Q2, the comparable EBIT margin significantly improved year-over-year, reaching 16.8%, compared to 15.0% in Q2/22. The increase was primarily due to the rise in volumes and the manifestation of the company's operating leverage.

 

Expecting profitable growth during the second half of 2023

We expect solid growth for H2 driven by two main factors: non-recurring wholesale promotional deliveries in Finland and new loose franchise store openings in APAC. With the projected growth, we see that the profitability will continue to improve y/y. We expect gross margin to be supported by growth in licensing revenue and lower impact of logistics costs. We forecast net sales of EUR 48.5m and EBIT of EUR 12.6m for Q3. For FY 2023, we project net sales of EUR 178.1m and EBIT of EUR 32.9m. Marimekko expects its net sales to grow in 2023 from the previous year and comparable EBIT margin is expected to be approximately 16-19%. Our current estimate for comparable EBIT margin stands at 18.5%, at the upper end of the current guidance.

 

Valuation remains at a neutral level

With no changes to our estimates, Marimekko’s valuation remains neutral as it currently trades between our luxury (13% discount on 23E EV/EBIT basis) and premium goods (22% premium) peer groups. Marimekko trades at roughly 14-12x EV/EBIT and 18-16x P/E (23-24E). We retain our TP at 10.5 while keeping HOLD-rating intact.

Marimekko - Accelerating towards year-end

18.08.2023 | Company update

Marimekko’s Q2 EBIT came in strong, and the company’s current profitability potential seems more robust than we earlier anticipated with increased outlook of licensing income. We adjusted our estimates such that 23E EBIT saw a 5% increase.

Strong profitability in Q2
While Marimekko’s Q2 topline was in line with our expectations, the company’s profitability came in strong, beating our estimates. Q2 net sales grew by 6% to EUR 40.3m, supported by strong Int’l growth. Soft wholesale sales pushed domestic sales below the comparison period. With higher licensing sales and lower logistics costs, the company’s gross margin improved to 63.7% which we view as very strong. Traditionally, a higher share of scalable licensing sales boosts the company’s gross margin as the material costs concerning such sales are very minor. By combining solid net sales growth and improved gross margin, Marimekko’s Q2 adj. EBIT improved to EUR 6.8m (16.8% margin). Adj. EPS amounted to EUR 0.12, which could have been stronger without increased net financial costs.

Increased ambition with new store openings
Although economic uncertainty is present globally, we expect that the company’s visibility to new demand in Asia has improved which is now seen in the increased estimate of new stores (15-20). Most of the store openings happen in Asia, which is one of the main drivers of Marimekko’s current strategy. By opening stores in new market areas, such as Singapore, Malesia, and Vietnam, Marimekko starts to build its ecosystem starting from key cities through which it eventually expands also to other cities. This concept has already demonstrated its effectiveness in other Asian countries such as Japan, Thailand, and China. Marimekko’s track record makes us confident in believing in the company’s success in long-term market expansion, especially when collaborating with competent partners.

Share price rally keeps the valuation neutral
We slightly upgraded our 23-24E EBIT estimates with positive profitability development of Q2 and an improved outlook of licensing sales. In our view, the company’s valuation remains neutral with the after-result rally in the share price. We retain our HOLD rating. By valuing Marimekko with the same multiples as earlier (23-24E EV/EBIT 13-11x), our TP is now EUR 10.5 (10.0).

Marimekko - Profitability way above expectations

17.08.2023 | Earnings Flash

Marimekko reported Q2 results above expectations. Q2 net sales came in line with our estimates while profitability topped our expectations. The guidance for 2023 was reiterated and the market outlook implies growth to continue in all of Marimekko’s main markets.

  • Group result: driven by strong Int’l development, Q2 net sales grew by 6% to EUR 40.3m (40.6/39.0m Evli/cons.), roughly in line with our expectations. Domestic sales however came in soft with decreased demand for wholesale sales. Improved gross margin was supported by lower logistics costs and increased licensing sales. Despite increased fixed costs, higher volumes and improved gross margin boosted adj. EBIT above the comparison period and our expectations. Adj. EBIT amounted to EUR 6.6m (4.9/5.0m Evli/cons.), reflecting a margin of 16.8%. Adj. EPS accounted for EUR 0.12 (0.09/0.10 Evli/cons.), which could have been better without decreased net financials.
  • Finland: topline decreased by 3% to EUR 22.2m, which was below our estimates (Evli: 24.2m). The growth was driven by solid retail sales while wholesale and licensing sales decreased by some 20%.
  • Int’l: net sales came in very strong and above our expectations. Topline grew by 21% to EUR 18.1m (Evli: 16.4m). The increase was supported by strong APAC and EMEA regions as well as North America. In total, Int’l wholesale sales increased by 18% y/y.
  • 23 market outlook: Marimekko expects its domestic sales to grow, and one-off wholesale deliveries to support Finnish sales development in H2. The APAC region and Int’l net sales are expected to grow. Licensing sales are expected to increase.
  • 23 guidance intact: Net sales to grow and adj. EBIT margin between 16-19%.

Marimekko - Back on a growth track

14.08.2023 | Preview

Marimekko publishes its Q2 result on Thursday, Aug 17th. We expect the company to deliver solid 7% growth and profitability on a double-digit level in Q2. New store openings are anticipated to boost H2 growth.

Expecting decent growth and profitability on a solid level
Marimekko saw a temporal decrease in net sales in Q1, while we expect the company to step back on a growth track with a y/y growth of 7% in Q2. Our Q2 net sales estimate amounts to EUR 40.6m, with Finland contributing by 5% and Int’l markets by 10% net sales increase. Topline growth is supported by strong domestic retail and wholesale sales as well as decent growth of the APAC region’s wholesale sales. Our view is that expanding fixed costs and gross margin below the comparison period will push profitability below the comparison period. Our Q2 adj. EBIT estimate amounts to EUR 4.9m (12% of net sales).

New store openings to boost H2 growth
Marimekko plans to open 10-15 new stores during 2023. Most of the openings will take place in the Asia region. In addition to sales, new stores will bring Marimekko global visibility and increase brand awareness. During the fall of 2023, Marimekko plans to open a new location in Singapore and a flagship store in Copenhagen, Denmark. Singapore expansion is made in cooperation with the company’s partner Tanachira which has built the foundation for Marimekko’s success in Thailand. After the Q1 result, we have counted such store openings in our estimates and expect them to bring additional revenue for H2’23.

Valuation on par
In our view, Marimekko’s short-term operating environment has stayed relatively intact, and thus we have made no changes to our estimates ahead of Q2 result. Additional uncertainty stems from the unstable macroeconomic environment, subdued consumer spending in China, the decreased purchasing power of European consumers, and the prevailing geopolitical tensions. However, we expect the company to deliver a 7% y/y increase in net sales aligned with its growth guidance in 2023. We foresee 23E adj. EBIT margin to continue in a declining trend with cost pressures, however remaining on a great level at 17.5%. With no changes in our estimates and share price in line with the previous update, we view the valuation as neutral and retain our HOLD rating. Target price is intact at EUR 10.

Marimekko - Result as expected, growth foreseen towards year-end

17.05.2023 | Company update

Marimekko reported Q1 results roughly in line with our expectations. Growth is seen to return and EBIT to improve in H2. We retain our HOLD-rating and TP of EUR 10.0.

Q1 net sales and EBIT decreased as expected
Q1 was characterized by robust comparative figures and subdued market development in Finland's wholesale deliveries, along with a decline in licensing sales that directly affected the overall scale. In Q1, the group net sales declined by 2% y/y to EUR 35.3m, however coming in slightly above our expectations. The decline was driven by softer sales development in Finland, the EMEA region and North America. Meanwhile, the APAC region and Scandinavia scored strong double-digit sales growth. Decreased licensing sales lowered gross margin below the comparison period despite product margins remaining on a solid level. Furthermore, increased fixed costs pressed Q1 adj. EBIT to EUR 3.8m, implying a margin of 10.9%. Our view is that the result contained no big surprises despite EBIT fell short of consensus quite clearly. 

Tightened grip on Asian shop openings
The company upgraded its outlook on new store openings in 2023 with now expecting to establish 10-15 new stores with most of them located in the Asia. In our view, this provides decent growth prospects for H2’23 and 2024, and consequently we slightly increased our H2 net sales estimates for the APAC region. Marimekko expects its 2023 EBIT margin to range between 16-19% which might imply a relative profitability below that of the comparison period. We however foresee this temporal due to the company’s front-loaded investments in its capabilities. In total, our 23E EBIT decreased by 1% while 24E profitability improved by 2%, reflecting enhanced beliefs for the APAC region’s growth.

Valuation not challenging
We foresee Marimekko’s valuation as not challenging with it trading above its premium, but below the luxury peer group. Marimekko’s earnings growth for 2023-24 will remain subdued due to uncertain market environment and front-loaded OPEX investments. With only minor adjustments made to our estimates, we retain our HOLD-rating and target price of EUR 10.0.

Marimekko - No big surprises

16.05.2023 | Earnings Flash

Marimekko reported Q1 results broadly in line with our expectations. Q1 topline came in slightly above our expectations while EBIT fell short of our estimates. The company reiterated its guidance for 2023.

  • Group result: Q1 net sales decreased by 2% y/y to EUR 35.3m, roughly in line with our expectations (34.8/34.1m Evli/cons.). The decline was driven by strong comparison figures as well as softer wholesale and licensing sales. Net sales were supported by the growth of Finnish retail and Int’l wholesale sales. EBIT was impacted by softer gross margin and increased fixed costs. Q1 adj. EBIT amounted to EUR 3.8m (10.9% margin), that fell short of our expectations (4.3/4.6m Evli/cons.), but contained no big surprises. Adj. EPS amounted to EUR 0.06 (0.08/0.09 Evli/cons.).
  • Finland: Net sales amounted to EUR 18.0m (Evli: 17.5m), reflecting y/y decline of 3%. Sales developed positively in retail while wholesale sales decreased as expected.
  • Int’l: Net sales came in in line with our estimates at EUR 17.3m (Evli: 17.3m), reflecting a y/y decline of 1%. The decline was driven by the EMEA region (-31%) as well as North America (-11%). Net sales development was positive in Scandinavia (+16%) and the APAC region (+16%).
  • 23 market outlook: Finnish sales expected to grow, driven by additional wholesale deliveries in H2. The APAC region expected to grow. 10 to 15 new stores opening, with most of them located in Asia. Licensing sales expected to decline y/y.
  • 23 guidance intact: Net sales to grow and EBIT margin between 16-19%.

Marimekko - Expecting a quiet quarter

12.05.2023 | Preview

Marimekko reports its Q1 result on Tuesday, May 16th. We expect a decline in revenue, driven by a top comparison period, soft performance in Finland, and prevailing market uncertainty.

Softness and uncertainty affecting Q1 net sales
We foresee that the uncertainty faced in Q4’22 will persist also into Q1’23, resulting in a 3.5% y/y decline in estimated Q1 net sales to EUR 34.8m. We expect a 5% drop in Finland sales and a slight 1% decline in international sales. This decline in revenue is primarily due to the uncertainty and strong comparison figures, as well as the soft outlook for wholesale and licensing sales in Finland in early 2023. We expect rising material costs, combined with market uncertainty, resulting in a lower gross margin compared to the previous period. Furthermore, with increasing fixed costs, our estimated adj. EBIT for Q1 is significantly lower than the previous year at EUR 4.3m, reflecting a margin of 12.4%.


Expecting growth and solid margins for full 2023
Despite the prevailing uncertainty, the fashion market in Finland appears to be performing relatively well, with some double-digit growth in Q1. However, Marimekko's top performance year ago partly explains its expected decline in Q1 sales. Nevertheless, our estimate for net sales in 2023 is EUR 175.3m, indicating a y/y growth of 5.3%. This growth is supported by new store openings in Asia and additional wholesale deliveries in Finland in H2. Marimekko itself anticipates growth in net sales in Finland and the APAC region, as well as internationally, while licensing income is expected to decline in 2023. Despite cost pressures, we expect the 2023 adj. EBIT margin to remain solid at 18.1%, slightly lower than the comparison period. With revenue growth, we expect the cost-base to scale more prominently in H2, leading in improving profitability towards the year-end. Our profitability estimate is close to the upper bound of the company's guidance range of 16-19%.


Valuation neutral ahead of Q1 result
We consider Marimekko's valuation to be neutral, as it currently trades between our luxury (40% discount) and premium goods peer group (20% premium). With our estimates intact, we retain our HOLD rating and target price of EUR 10.0 ahead of Q1 result. 

Marimekko - Slight uncertainty visible, but growth continues

17.02.2023 | Company update

Marimekko delivered solid Q4 figures despite a challenging domestic market. Q1’23 seems to continue soft in Finland, but on a group level, the company expects to see growth in 2023. We retain our HOLD rating and TP of EUR 10.0.

Q4 EBIT came in above expectations
Marimekko delivered solid Q4 figures, especially considering the soft domestic wholesale market and strong comparison figures. Q4 net sales grew by 1% y/y to EUR 48.4m. The growth was mostly supported by int’l markets while sales in Finland declined by 2% due to lower non-recurring wholesale deliveries. Moreover, domestic wholesale customers experienced softness which was visible also in Marimekko’s Q4 net sales. Higher discounts and lower licensing income pushed the gross margin below the comparison period. In addition, Marimekko accordingly continued its investments in future growth and scalability which resulted in elevated fixed costs. Thus, EBIT fell short of the comparison period but landed above our expectations. Q4 adj. EBIT amounted to EUR 6.9m (8.9% margin). The BoD proposes a DPS of EUR 0.34 for 2022.

A strong brand provides growth in a challenging market
Finland discovered some softness in Q4 which we expect to continue also in Q1’23. The company guides 2023 revenue to grow and an EBIT margin between 16-19% (22: 18.2%). In our view, strong retail growth in 2022 reflects the power of the Marimekko brand and its capability to deliver growth also in a challenging market. In addition, non-recurring wholesale deliveries will support H2 growth in Finland. However, we foresee the growth pace to slow down from levels seen during the past few years. We expect Marimekko to grow by 5.3% in 2023, with domestic growth of 6% and int’l increase of 5%. With 23E gross margin flat and cost pressures arising from fixed costs, we expect no major expansion in 23E EBIT margin, with it amounting to 18.3%.

HOLD with a target price of EUR 10.0
We made no major changes in our estimates with the company’s guidance coming in quite in line with our expectations. The company’s 23-24E valuation seems quite modest compared to history and peers, but with uncertainty elevated, we retain our HOLD rating and TP of EUR 10.0. On the other hand, a subdued growth pace also justifies lower multiples.

Marimekko - Solid EBIT despite challenging market

16.02.2023 | Earnings Flash

Marimekko’s Q4 net sales came in below our expectations while EBIT was stronger than expected. Guidance for 2023 implies growth to continue and profitability to remain on a good level. However, soft market is expected to continue also in Q1’23 in Finland.

  • Q4 group result: Net sales came in below our expectation, by growing by 1% y/ to EUR 48.4m (49.4/48.9m Evli/cons.). Growth was good in int’l markets while domestic sales declined as expected. Adj. EBIT landed at EUR 6.9m (14.3% margin), beating our and cons. expectations (6.4/6.5m Evli/cons.). Although, profitability was negatively impacted by softer gross margin and increased fixed costs.  Adj. EPS amounted to EUR 0.10 (0.13/0.13 Evli/cons.).
  • Finland: Net sales amounted to EUR 30.1m (Evli: 29.6m), reflecting y/y decline of 2%. Retail sales developed nicely by growing by 19% y/y while wholesale sales fell short of the comparison period due to a lack of extraordinary deliveries and soft market environment.
  • Int’l: Net sales grew by 5% to EUR 18.4m (Evli: 19.8m). Growth was good in the APAC and EMEA regions while Scandinavia and North America developed more moderately.
  • 22 DPS: The BoD proposes EUR 0.34 dividend per share for the year 2022 (0.38/0.41 Evli/cons.).
  • Market outlook for 23: The company expects Finland to grow with larger extraordinary wholesale sales deliveries than in 2022 as well as both the APAC region and int’l sales to grow. Q1’23 group net sales to fall short of that of the comparison period due to challenging wholesale environment in Finland, lower licensing sales and strong comparison period. 2023 licensing income is expected to come in below the comparison period.
  • 23 guidance: The company expects net sales to grow and an EBIT margin between 16-19%.

Marimekko - Valuation on par

13.02.2023 | Preview

Marimekko reports its Q4 result on Wednesday, 15th of Feb. We anticipate the growth pace to slow down and cost pressures to cut margins. We retain a TP of 10.0, but adjust the rating to HOLD (BUY), reflecting a neutral valuation.

Q4 result should contain no surprises
Marimekko expects its 2022 revenue to grow and adj. EBIT margin to land between 17-20%. The growth rate already saw some decelerating in Q3 and came in at 4.0%. In Q4, we expect the company to post a y/y growth of 2.7%, with revenue amounting to EUR 49.4m. The growth is driven by int’l sales while we expect revenue in Finland to decline due to a lack of extraordinary wholesale deliveries. With cost pressures arising from higher material costs and elevated fixed costs, our Q4 adj. EBIT estimate falls below that of the comparison period, to EUR 6.4m (13.0% adj. EBIT margin). With 22E EPS amounting to EUR 0.59, we expect the BoD to propose a DPS of EUR 0.38 (~60% payout rate). Overall, we foresee that Q4 should contain no large surprises.

Navigating through a tough market
We foresee the expected slowing economic growth and inflation to have an impact on fashion spending in 2023 with consumers fighting against a decline in purchasing power. Inflation has also risen in one of Marimekko’s core markets Japan. We expect Marimekko’s strong brand to protect the demand for the company, even during harder times. Although, we expect topline growth to significantly slow down from the levels seen during the past few years. For 2023, we estimate y/y growth of 6.9%, with revenue amounting to EUR 179.0m. The topline growth is largely supported by int’l sales while we expect sales in Finland to grow only by 4% in 2023. We anticipate profitability to remain at strong levels, 23E EBIT margin amounting to 18.2%. Furthermore, with its new strategy, the company aims to improve its scalability and aims for a 20% adj. EBIT margin.

HOLD with a target price of 10.0
We made no changes to our estimates ahead of the Q4 result. Since our last update, Marimekko’s share price has improved by some 10% which in our view has changed the valuation neutral. The company currently trades with 23-24E EV/EBIT and P/E multiples of 13-11x and 16-15.5x respectively. We adjust our rating to HOLD (BUY) and retain a TP of EUR 10.0.

Marimekko - Growth continues with a gentler slope

03.11.2022 | Company update

Marimekko's Q3 growth was solid although EBIT fell short of our expectations. With higher-than-expected cost development, we modified our EBIT estimates downwards.

Decent Q3 result, EBIT below market expectations
Marimekko posted solid Q3 figures. Although, due to strong comparison figures both the top- and bottom line fell short of expectations. Group net sales grew by 4% y/y to EUR 44.1m driven by strong int’l sales and good growth in domestic retail sales. Domestic net sales declined by 7% y/y while int’l sales increased by 28% y/y mostly driven by strong development of the APAC region. Increased logistics costs pressed the gross margin slightly below that of the comparison period. Moreover, fixed costs saw some pressure through elevated personnel and IT-related costs which caused Q3 EBIT to fall below the comparison period. Q3 EBIT amounted to EUR 11.1m, reflecting an EBIT margin of 25.2% which was still on a great level.

Market might challenge the company's increased ambitions
Marimekko renewed its strategy for 2023-27 and consequently raised its growth target to 15%. Currently, against the company's growth ambitions, we see low consumer purchasing power and slowing economy support rather single- than double-digit growth seen during the recent years. On the other hand, increasing brand awareness should support the demand also during uncertain times. We expect the company to perform operatively well in a weaker market driven by lessons learned during the pandemic, but we estimate the demand for Marimekko’s offering to see some slowdown. For that reason, we expect the company not to reach its growth target in the coming years.

Valuation remains favorable
We lowered our estimates, driven by higher-than-expected cost pressures. Despite decreased EBIT estimates, we see upside potential in Marimekko’s current valuation. Currently, Marimekko is valued with 23E EV/EBIT of 11x while we, with our new target price, value the company with a corresponding multiple of 12x. Reflecting estimate adjustments, we adjust our TP to EUR 10.0 (prev. 12.0). With a moderate valuation, we retain our BUY-rating.

Marimekko - Growth rate slowed down as expected

02.11.2022 | Earnings Flash

Marimekko delivered solid Q3 figures. Net sales came in with single-digit growth and relative profitability was on a robust level.

  • Group result: Marimekko’s net sales came in slightly below expectations and grew by 4% y/y to EUR 44.1m (45.0/45.3m Evli/cons.). The growth was driven by both Int’l sales and retail sales in Finland. Adj. EBIT was clearly below our expectations and amounted to EUR 11.1m (25.2% margin) (13.0/12.3m Evli/cons.). Profitability was negatively affected by elevated fixed costs (increased IT-investments and personnel costs) and weaker gross margin (increased logistics costs and elevated discounts).  In turn, the profitability was supported by favorable sales-mix and pricing. EPS amounted to EUR 0.22 (0.25/0.24 Evli/cons.).
  • Finland declined by 7% y/y to EUR 26.7m (Evli: 29.1m) due to weaker wholesale deliveries which the company was already guided. However, retail sales saw solid 10% growth.
  • Int’l grew strongly by 28% y/y to EUR 17.4m and came in above our expectations (Evli: 15.9m). The growth was supported by retail and wholesale sales in the APAC region as well as abnormal wholesale deliveries compared to Q3’21. The growth was also strong in Scandinavia and EMEA region.
  • 2022 outlook: Domestic sales are expected to grow, but wholesale deliveries to be below that of the comparison period. The APAC region and international sales are expected to increase clearly on the comparison period. In total, net sales are expected to grow, but the growth pace to slow down in H2’22. Licensing income is expected to be above comparison period.
  • FY22 guidance intact: expecting net sales to grow and an EBIT margin between 17-20%.
  • Analyst comment: Although the result came in below our expectations, the rate of int’l sales growth surprised us positively which we see crucial for Marimekko’s long-term success.

Marimekko - Upgrade to BUY

14.09.2022 | Company update

Marimekko elaborated the details of its revised strategy in its CMD and increased its targets to a more ambitious level. We left our estimates broadly intact with the uncertain market restricting future visibility. With the declined stock price, Marimekko’s valuation seems quite attractive, and we raise our rating to BUY (HOLD) but adjust TP to EUR 12.0 (13.2) reflecting the uncertain market environment.

Long-term targets were raised
In its capital markets day, Marimekko introduced its revised strategy for the period of 2023-27 and opened drivers for its updated long-term financial targets. The company aims for an annual net sales growth of 15% (prev. 10%) and a comparable operating profit of 20% (prev. 15%). Net debt to EBITDA ratio of max. 2x and yearly dividends of 50% of net earnings were left intact. We see the growth target as somewhat ambitious, especially during uncertain times that the western economies are currently facing. Meanwhile, we believe that the margin target is within a reach with the topline growth continuing and investments in efficiency.

Five success factors for scalable growth
The success of Marimekko’s strategy is based on five different pillars of which several relies on megatrends. The company emphasizes sustainability, a creative vision to obtain a wider audience, accelerating growth in Asia, love for the Marimekko brand and people, and end-to-end digitality to boost omnichannel growth and efficiency in order to achieve its ambitious targets. We see that Marimekko is well positioned in sustainability which is an ever-increasing trend in lifestyle products. Moreover, Marimekko’s strong brand supports the demand for Marimekko products even during uncertain times.

BUY with a TP of EUR 12.0
With the recent decline in Marimekko’s stock price, we see the company’s current valuation as quite attractive and upgrade our rating to BUY (prev. HOLD). However, with the uncertainty concerning the market environment and our estimates, we lower our TP to EUR 12.0 (prev. 13.2).

Marimekko - Upgrades its long-term financial targets

06.09.2022 | Analyst comment

Marimekko raises its long-term financial targets and reveals its focus areas for the new strategy period of 2023-27.

  • Marimekko’s new long-term financial targets are:
    • Annual growth of 15% in net sales (prev. over 10%)
    • Comparable EBIT margin of 20% (prev. 15%)
    • Net debt/EBITDA ratio max. 2x (unchanged)
    • Intentions to pay a yearly dividend, at least 50% of net income (unchanged).
  • In our view, net sales target is somewhat ambitious but well within reach with int’l growth succeeding. However, current macroeconomic trends, especially in western economies, might cause some challenges in achieving annual growth of 15% in the short-term.
  • A comparable EBIT margin target of 20% was expected as the company has outpaced its profitability target during the past two years. In 2021, the company recorded an EBIT margin of 20.5% while our margin estimate for 2022 is 19.4%.
  • Marimekko intends to focus on scaling its business and growth, especially in international markets during the next strategy period of 2023–27. The success relies on factors such as focus on sustainability, vision to speak to a wider audience, accelerated growth in Asia, love for the Marimekko brand, and increased digitalization to boost omnichannel growth and efficiency.
  • The company will elaborate on the strategic direction and the new long-term financial goals in its Capital Markets Day on 14 September. We maintain our estimates and recommendation intact and publish an update on Marimekko after the CMD.

Marimekko - Some uncertainty ahead

18.08.2022 | Company update

Marimekko’s Q2 result was strong and broadly in line with expectations. The outlook provided for H2 is solid, but the upside potential is in our view restricted.

Growth as expected, EBIT slightly above our estimates
Marimekko delivered solid topline growth in Q2 with net sales amounting to EUR 38.0m (Evli: 37.0m), representing 16% y/y growth. The growth was driven by strong retail sales in Finland and solid development of int’l sales. According to the company, int’l sales were impacted by unusual weightings of wholesale deliveries, partly indicating a strong comparison period. Gross margin remained at the comparison period’s level, thanks to a favorable sales-mix. With revenue growing nicely, Q2 EBIT improved to EUR 5.7m (Evli: 5.3m), reflecting an EBIT margin of 15%. However, increased fixed costs restricted the profitability improvement somewhat.

We made some marginal estimate adjustments
We slightly adjusted our near-term estimates mainly driven by the solid outlook provided for H2. We see the sales development strong given the company’s outlook and the brands ATH awareness. In 2022, we expect net sales in Finland to grow by 9% y/y to EUR 100.9m while our estimate for int’l sales is EUR 67.4m, reflecting y/y growth of 13%. Our group revenue estimate for 2022 amounts to EUR 168.3m. With increased cost pressures, we expect a 22E EBIT of EUR 32.6m (19.4% margin). In 2023, we expect group revenue to grow by 7% y/y, driven by both Finland (+5%) and int’l sales (+10%). Meanwhile, with gross margin improving slightly and the increase in fixed costs calming down, our 23E EBIT margin estimate is 19.7%.

HOLD with a target price of EUR 13.2 (14.5)
With the increased uncertainty and risks concerning the development of the market environment, we have downgraded our valuation multiples for Marimekko. We approximate Marimekko should be trading with 22-23E EV/EBIT multiples of 16-15x. Now the company trades below our TP, but with the earnings growth being moderate and upside potential not being massive, we retain our HOLD-rating and adjust TP to EUR 13.2 (14.5).

Marimekko - Continues to deliver strong results

17.08.2022 | Earnings Flash

Marimekko delivered strong Q2 result, with net sales broadly in line with and EBIT beating our estimates. The growth was strong in domestic market with y/y growth of 25% while int’l sales grew by 5% y/y.

•    Q2 group result: net sales increased by 16% y/y to EUR 38.0m, which was broadly in line with our and consensus expectations (37.0/36.6m Evli/cons.). The growth was driven by domestic sales while international growth was a bit moderate. Gross margin was approx. flat y/y. With increased revenue, adj. EBIT amounted to EUR 5.7m (5.3/5.8m Evli/cons.), reflecting an EBIT margin of 15%. EPS amounted to EUR 0.12 (0.10 Evli/ cons.).
•    Finland: driven by strong retail sales, Finnish net sales increased by 25% y/y to EUR 23.0m (Evli: 20.5m). Wholesale sales were flat y/y.
•    Int’l: with y/y growth of 5%, net sales amounted to EUR 15.0m (Evli: 16.5m). The growth was driven by Scandinavia, the EMEA region, and the APAC region while North America saw low double-digit y/y decrease in its net sales. Int’l business was negatively impacted by a different kind of weighting of wholesale deliveries.
•    Category split: Fashion sales amounted to EUR 12.0m (+6% y/y). Home category grew by 11% y/y to EUR 16.9m. Bags and accessories showed strong y/y growth of 48% and amounted to EUR 9.0m.
•    Market outlook: Marimekko expects domestic sales to grow as well as APAC sales and int’l sales to increase significantly. Both retail and wholesale revenue are expected to increase in 2022. Licensing income is also estimated to be higher than that of the comparison period. In percentage terms, net sales growth is expected to be stronger at the beginning of 2022 than in H2.
•    FY’22 guidance intact: expecting revenue to grow and an EBIT margin ranging between 17-20%.

Marimekko - The undervaluation has narrowed

14.08.2022 | Preview

Marimekko releases its Q2 result on Wednesday. The company delivered strong Q1 result, and we expect the trend to continue also in Q2. The demand for lifestyle products has been favorable in H1, but strong comparison figures, low consumer trust, and an inflationary environment might affect the magnitude of H2 growth.

Demand still strong, inflation kicks in during H2 and 2023
The demand for fashion and lifestyle products has been strong in H1. We see the trend especially in fashion, bags, and accessories where the consumers have been renewing their wardrobe collections after COVID-19 lockdowns. In addition, Marimekko has consistently grown its brand awareness abroad which can be seen in a strong international growth. However, we see the inflation starting to kick in during H2 and 2023, and with the combination of low consumer trust and strong comparison figures, we see the growth slowing down in H2.

Q2 is driven by both domestic and international growth
We made no changes to our estimates ahead of the Q2 result. In Q2, with the favorable market environment, we expect revenue to amount to EUR 37.0m driven by domestic growth of 12% and international growth of 15%. We expect all markets, except North America, to see double-digit growth in Q2. We expect adj. EBIT to improve y/y to EUR 5.3m, but adj. EBIT margin of 14.3% to fall below the comparison period driven by softer gross margin and increased fixed costs. Our 2022 topline estimate is EUR 167.7m (+10% y/y) and EBIT is EUR 32.5m (19.4% margin). The company expects its 2022 revenue to be higher that of the comparison period and its EBIT margin to land within the range of 17-20%.

HOLD (BUY) with a target price of EUR 14.5
Marimekko is valued with 22-23E EV/EBIT multiples of 16-14.5x and 22-23E P/E multiples of 21-20x. The current valuation is quite neutral, but most of the undervaluation has shrunk since our last update. In our view, the visibility of H2 is somewhat uncertain and with inflation starting to kick in, we see that consumer demand could be diluted or skewing towards lower price point lifestyle goods. We downgrade our rating to HOLD (prev. BUY) and retain TP of EUR 14.5.

Marimekko - Top performance

14.05.2022 | Company update

Marimekko delivered strong Q1 figures by showing double-digit growth in all its markets. Although the market environment includes uncertainties, Marimekko is trading with a quite moderate valuation. We upgrade our rating to BUY (HOLD) and adjust TP to EUR 14.5 (12.8).

Strong start for the year
Marimekko’s Q1 performance was clearly better than we had anticipated. Topline saw an increase of 24% y/y driven by all markets. A favorable trend of retail and wholesale sales in Finland and good development of int’l sales boosted the revenue to high double-digit growth. The largest segment, Marimekko’s home market Finland grew by 27% y/y while int’l sales increased by 20% y/y. Q1 group topline amounted to EUR 36.0m (Evli: 30.4m). Gross margin (63%) was negatively affected by increased logistics costs and higher discounts. Driven by softer gross margin and increased fixed costs, Q1 adj. EBIT margin (18.4%) was below that of the comparison period, adj. EBIT amounting to EUR 6.6m (Evli: 3.9m). EPS totaled EUR 0.12 (Evli: EUR 0.08).

Guidance intact, we made estimate revisions
Marimekko reiterated its 2022 guidance: revenue above the 2021 level and adj. EBIT margin between 17-20%. The company also expects the relative growth pace to slow down in H2, which stems from the strong comparison figures as well as lowered consumer confidence to which Marimekko was quite immune in Q1, in our understanding. We raised our 22E EBIT margin estimate near the upper bound of the guidance. Driven by a strong start of the year, we expect the company to face low double-digit growth in 2022 by full-year net sales amounting to EUR 167.7m and adj. EBIT totaling EUR 32.5m (more on report page 2).

BUY with a target price of EUR 14.5 (12.8)
The company’s share price has fallen from the 2021 highs by some ~50%. Meanwhile, Marimekko’s peers have also seen a decline in their valuation. Given the strong start of 2022 and by accepting a 22E EV/EBIT multiple of 18x, we upgrade our recommendation to BUY (HOLD) and adjust TP to EUR 14.5 (12.8).

Marimekko - Q1 result topped our estimates

13.05.2022 | Earnings Flash

Marimekko came in strong with Q1 net sales as well as EBIT growing rapidly. The company’s resilience to weakened consumer confidence was stronger than we were expecting.

•    Q1 group result: topline increased by 24% y/y to EUR 36.0m (EUR 30.4m/32.4m Evli/cons.) beating our and consensus estimates. Net sales growth was driven by solid development of wholesale and retail sales in Finland as well as good performance of int’l sales. Adj. EBIT improved to EUR 6.6m (EUR 3.9m/3.9m Evli/cons.), being 18.4% of revenue. Weakened relative profitability was driven by increased material and fixed costs. On the other hand, EBIT was supported by topline growth and lower D&A. EPS amounted to EUR 0.12 (EUR 0.08/0.08 Evli/cons.).
•    Finland: net sales grew by 27% y/y to EUR 18.5m (Evli: EUR 15.2m). The growth was driven by both retail (+18% y/y) and wholesale sales (+41% y/y).
•    Int’l: revenue saw an increase of 20% y/y, amounting to EUR 17.5m (Evli: EUR 15.2m). Good sales development was driven by all market segments. Topline grew strongly in the EMEA region (+34% y/y), North America (+26% y/y), and Scandinavia (+23% y/y) while the growth in the APAC region was more moderate with an increase of 10% y/y.
•    2022 guidance reiterated: Topline is expected to be above that of the comparison period (2021: EUR 152.2m) and adj. EBIT margin to be between 17-20% (2021: 20.5%).
•    Outlook: although consumer confidence has been in a trend of decline, it seems that Marimekko has enjoyed still solid demand in Q1. The company expects retail, license, and wholesale sales to grow in 2022. In percentage terms, Marimekko estimates the net sales growth to be stronger at the beginning of 2022 than in H2.

Marimekko - Uncertainty ahead of Q1

10.05.2022 | Preview

We revised our near-term estimates ahead of Q1 due to declined consumer confidence, especially in Finland and Japan. We retain HOLD rating and adjust TP to EUR 12.8 (15.8).

New collaborations incoming
In early 2022, Marimekko announced of few collaborations with global lifestyle brands to enhance its brand awareness in its growing markets. Adidas collaboration got a sequel with new spring/summer collection that dropped during April 2022. In addition, Marimekko collaborates with a luxury brand Mansur Gavriel. The bag collection will be available starting from June 2022. Moreover, Marimekko announced its collaboration with global furniture and décor company IKEA. The collection will be released in spring 2023. Collaborations bring Marimekko highly scalable licensing revenue but, more importantly, by cooperating with popular lifestyle companies Marimekko’s brand awareness improves abroad significantly.

Consumer trust in decline in Marimekko’s main markets
Driven by increased inflation and interest rate pressures as well as geopolitical tenses due to Russia’s attack on Ukraine, consumer trust has been in a trend of decline in the western markets. Also, in Marimekko’s second-largest market, Japan, the inflation has picked up driven by material and energy costs. We expect the declined consumer activity to have a slight impact on Marimekko’s Q1 sales development and thus we have revised our quite optimistic near-term estimates. From what we earlier expected, we have downgraded our 22E topline estimate by 2% while our 22E EBIT estimate faced a decrease of 5% (see report page 2).

HOLD with a target price of EUR 12.8 (15.8)
In recent months, Marimekko’s valuation has melted alongside its peer group’s valuation. With our revised estimates, the company trades with 22E EV/EBIT and P/E multiples of 15x and 19x respectively. Considering our acceptable 22E EV/EBIT and P/E multiples of 17x and 21x respectively, we see slight upside potential in Marimekko’s stock price but, at the same time, remind about the uncertainty concerning the demand for Marimekko’s products. We retain our HOLD rating and adjust TP to EUR 12.8 (15.8).

Marimekko - Issuance of new shares without payment

13.04.2022 | Earnings Flash

Yesterday, the AGM approved the BoD’s dividend proposal and decided on a share split with a ratio of 5:1. With our estimates intact, we update our target price to EUR 15.8 (79) and retain HOLD-rating.

  • The AGM approved the Board of Directors’ proposal to distribute a regular dividend of EUR 1.60 per share plus an extraordinary dividend of EUR 2.00 per share to be paid for the financial year 2021.
  • At the same time, the AGM decided that new shares will be issued to the shareholders without payment in proportion to their holdings so that four new shares are issued for each share. In total, 32,519,336 new shares will be issued, increasing Marimekko’s total number of shares from 8.1m to 40.6m.
  • Split has no effect on Marimekko’s fair value and hence we have made no changes to our estimates. We update our target price to EUR 15.8 (79) and retain HOLD-rating.
  • Marimekko publishes its Q1 result on 13 May 2022.

Marimekko - Earnings growth smoothens

16.02.2022 | Company update

Marimekko delivered strong Q4 figures, outpacing our and consensus estimates. Net sales development was very good in both domestic and international markets. We downgrade our rating to HOLD (BUY) and adjust TP to EUR 79 (84).

Solid quarter
Marimekko came in strong with Q4 net sales of EUR 48.1m (+29% y/y). The growth was driven by wholesale and retail sales in Finland as well as wholesale sales in the APAC region and Scandinavia, while the EMEA region declined due to the actions to control grey exports. Retail sales in North America developed very strongly. Higher logistical costs reduced the gross margin to 57.9% (prev. 58.9%). Driven by increased net sales, the adj. EBIT improved by 17% y/y to EUR 7.6m (15.9% margin). Increased personnel (one-time bonus) and other costs weakened the adj. EBIT margin from 17.4% to 15.9%. EPS amounted to EUR 0.72 and the BoD proposed a dividend of EUR 3.60 (including an additional EUR 2 dividend).

Confirmation for international growth
International sales got back on a growth path in Q4’21 and the company guided the segment’s largest market, the APAC region, to grow clearly in FY’22. Segment’s strong development speaks about the increased brand awareness, particularly seen in Asia. In FY’22, we expect int’l net sales to grow by 14% y/y, while expecting domestic growth to slow down to 8% y/y due to the lack of large one-time wholesale deliveries. In our estimates, group revenue amounts to EUR 167.9m, and driven by increased logistical costs the gross margin falls below the comparison period to 60%. Driven by reduced gross margin and increased fixed costs, the adj. EBIT margin of 19.3% (adj. EBIT EUR 32.4m) falls also short of the record high comparison period.

HOLD with a TP of EUR 79 (84)
With our revised estimates, Marimekko trades with a 22-23E EV/EBIT multiple of 19-18x. The company’s valuation has historically varied between EV/EBIT multiple of 17-21x. With the slowdown in the earnings growth within the next few years and the decline in the acceptable valuation level, we downgrade our rating to HOLD (BUY) and adjust TP to EUR 79 (84).

Marimekko - Strong development continued in Q4

15.02.2022 | Earnings Flash

Marimekko’s Q4 result outpaced our estimates and the company grew very strongly. The guidance implies the trend to continue in 2022.

Group net sales increased by 29% y/y to EUR 48.1m (41.6m/42.3m Evli/cons.). The growth was driven by wholesale and retail sales in Finland as well as wholesale sales in the APAC region and Scandinavia. Retail sales in North America developed very strongly.
Finland: Net sales grew by 32% and amounted to EUR 30.6m (26.8m/26.8m Evli/cons.). Non-recurring promotional deliveries supported the good development of wholesale sales.
International: Revenue increased by 23% y/y to EUR 17.4m (14.7m/15.5m Evli/cons.), representing 36% of total net sales. Sales development was strong in North America (+57%), Scandinavia (+40%), and the APAC region (+36%). The EMEA region (-21%) declined due to actions to control gray exports.
Gross profit totaled EUR 27.8m (25.1m Evli). The company reported a gross margin of 57.9% (60.3% Evli). The margin was affected by increased logistical costs.
Adj. EBIT improved by 35% y/y to EUR 7.6m (5.8m/6.0m Evli/cons.), meaning a 15.8% margin. The improvement in profitability was mainly driven by increased net sales.
EPS grew by 35.6% y/y to EUR 0.72 (0.54/0.55 Evl/cons.).
Dividend proposal: The BoD proposes FY’21 DPS of EUR 1.60 and extraordinary DPS of EUR 2.00 (1.60/1.60 Evli/cons.). In addition, the board has decided to pay FY’20 DPS of EUR 1.00.
Guidance 2022: Revenue is expected to be above that of the comparison period (2021: EUR 152.2m). Adj. EBIT margin is expected to be between 17-20% (2021: 20.5%).

Marimekko - Valuation still favorable

04.11.2021 | Company update

Marimekko released strong Q3 figures that overall outpaced our estimates. Development was strong in its domestic market, but Int’l business was sluggish due to temporal challenges and seasonality. We made only minor adjustments to our estimates.

Strong domestic growth and a record EBIT

Marimekko’s Q3 result came in strong compared to our expectations. Net sales growth of 11% y/y was driven by strong wholesale sales in Finland (+25% y/y). Controls of grey exports and lower licensing revenue decreased international net sales by 10% y/y. Despite the increased fixed costs, the company delivered its record EBIT, totaling EUR 13.3m (31.3% margin). Profitability was boosted by improved gross margin and increased net sales.

 

Int’l sales to get back on a growth path

We see the decline in international sales to be temporal and expect the company to get back on a growth path in Q4’21. Although the int’l revenue declined, the brand sales increased by 40% y/y in Q3 which indicates that the popularity of the brand is still up and keeps growing. Marimekko has positioned well in its domestic market, but we also expect that new and ongoing brand collaborations are set to increase brand awareness abroad, which eventually grows the share of int’l business. Like most of companies, Marimekko is also facing some challenges in logistics and material availability. Cost inflation has woken up and is raising its head. Due to relatively large inventories, the cost inflation shows in figures with a lag. After considering above mentioned factors, we made only minor adjustments to our estimates, now expecting 21E net sales of EUR 145.7m and adj. EBIT of EUR 30.2m (20.7% margin). During 2022-23, we expect Marimekko to grow by 10.8% and 8.5% respectively as well as reach an adj. EBIT margin of 18.9% and 17.8% respectively.

 

BUY with a target price of EUR 84.0

In our view, Marimekko has room for an upside as it's valued with a 22E EV/EBIT multiple of 19.8x, reflecting a 20% discount to its luxury peers. We retain our BUY-rating and TP of EUR 84.0.

Marimekko - Estimates were beaten

03.11.2021 | Earnings Flash

Marimekko’s Q3 result outpaced our expectations. Net sales grew by 11% y/y to EUR 42.4m and adj. EBIT amounted to EUR 13.3m (31.3% margin). The company reiterated its FY’21 guidance.

Group result: net sales topped our estimates by growing 11% y/y to EUR 42.4m vs. 40.9m/42.3m Evli/cons. The growth was driven by a favorable trend in wholesales in Finland. Adj. EBIT improved to EUR 13.3m vs. 8.1m/10.1m Evli/cons. with a 31.3% margin. EPS totaled EUR 1.30 and grew by 32% y/y.
Finland: Marimekko brand’s popularity seemed to continue in Finland and net sales increased by 25% y/y to EUR 28.8m (Evli: 25.3m). The growth was driven by a favorable trend in wholesale sales (+65% y/y).
International: One of Marimekko’s strategy’s backbones, international sales, fell short of our expectations and was a bit disappointment. Net sales decreased by 10% y/y to EUR 13.6m (Evli: 15.6m). Sales development was weak in the EMEA and APAC regions, but Scandinavia and North-America managed to increase their revenue y/y.
Adj. EBIT: Adj. EBIT was very strong, totaling EUR 13.3m (31.3% margin) vs. 8.1m/10.1m Evli/cons. Profitability was boosted by net sales growth and improved gross margin. Worth to notice is that fixed costs increased in Q3 and the trend is expected to continue in Q4.
No changes in FY’21 guidance (revised on Sep 23rd): expecting net sales and adj. EBIT margin to be above that of the comparison period.
• Marimekko’s strong performance in Finland provides continuity, but international sales especially in the APAC region cause some concerns. Our aim is to find more information for the weak performance of international sales in Marimekko’s Q3 webcast (today at 2 pm Finnish time).

Marimekko - Expected guidance improvement

23.09.2021 | Earnings Flash

Marimekko specified its outlook for FY 2021, now expecting adj. EBIT margin to be above that of the comparison period (2020: 16.3%). Revenue guidance remains intact and is expected to grow from the previous year (2020: EUR 123.6m). Our estimates were already in line with the new guidance; we make no changes to our estimates or recommendation.

  • Marimekko specified its guidance today, now expecting the comparable operating profit margin to be higher than in the previous year (2020: 16.3%). The company previously expected the comparable operating profit margin to be on par with or above the comparison period. Marimekko expects revenue to exceed the comparison period (2020: EUR 123.6m). The uncertainties related to the pandemic situation concerning the rest of the year have been reduced from previous expectations, thus contributing to the guidance improvement.
  • Based on the guidance revisions we see no need for changes to our estimates. Our estimates already reflected growth and margin improvement, expecting the company to grow by 16% and reach an adjusted EBIT margin of 17.1% in FY 2021, and as such remain in line with the company’s new outlook.
  • As our estimates remain intact and our expectations for the H2 outlook already were quite positive we retain our target price of EUR 84 and BUY-rating. Valuation remains at a higher level compared with both peers and the company’s own historic multiples, which is justifiable by the good outlook and higher profitability levels.

 

Marimekko - Only getting warmed up

20.08.2021 | Company update

Marimekko’s Q2 figures came in above estimates. The company is still only laying out the foundation for sustained international expansion, and we believe this underpins earnings growth potential for years to come.

EBIT margin potential will not fully materialize this year

Finland’s 61% y/y growth drove Q2 top line to EUR 32.7m, up 40% and above the EUR 29.3m/29.3m Evli/cons. estimates (last year’s store closures softened the comparison period). Both Finnish Retail and Wholesale advanced a lot while International, up 20% y/y, was mainly driven by Wholesale. Home wares continued to sell well and in our opinion the offering’s breadth is one point that testifies to Marimekko’s strengths. Q2 EBIT was EUR 5.5m vs the EUR 2.9m/4.0m Evli/cons. estimates; we find the positive surprise relative to our estimates stemmed from the EUR 2.4m gross profit beat. Digital and omnichannel customer experience projects will add to costs in H2 and Marimekko’s guidance moderates estimates for the rest of the year.

We see there is a long earnings runway ahead

Collaborations like the Adidas one show how the strategy works as the Marimekko brand is enjoying a rejuvenation period. We understand the Adidas deal generated ca. EUR 1m in revenue and profits in Q1; we expect license revenue will remain below EUR 3m this year, but the brand benefits extend beyond direct financial gains. Marimekko doesn’t have that much more growth potential in Finland but is still very modest in the global fashion & apparel context; upside potential remains considerable and from this perspective the long-term 10%+ CAGR target doesn’t seem very challenging. Marimekko began to gather pace towards long-term ambitions a few years before the pandemic and has already been able to post above 15% EBIT margins. In our view the company should be able to sustain long-term profitability at least a few percentage points above the stated target level.

Valuation remains reasonable considering the potential

Marimekko’s earnings-based multiples, roughly in the 19-25x EV/EBIT range on our FY ’21-23 estimates, have continued to climb and are now near those of luxury goods peers. Multiples are also high relative to their own historical levels, but we view this justified since the company’s profile now stands on a whole new level. Our new TP is EUR 84 (63); we retain our BUY rating.

Marimekko - Great figures

19.08.2021 | Earnings Flash

Marimekko’s Q2 results came in above our and consensus’ estimates. Top line was driven by 61% growth in Finland and gross margin was also some 120bps above our estimate. Marimekko thus reached high absolute and relative profitability. The company however left its guidance intact, which moderates H2 estimates.

  • Q2 revenue grew by 40% y/y to EUR 32.7m, compared to the EUR 29.3m/29.3m Evli/consensus estimates. Finland came in at EUR 18.4m vs the EUR 15.1m/14.9m Evli/consensus estimates, helped by a favorable trend in retail and wholesale revenue. Total Retail revenue was EUR 15.1m vs our EUR 13.9m estimate while Wholesale amounted to EUR 17.1m vs our EUR 15.2m estimate.
  • Gross profit amounted to EUR 20.4m vs our EUR 17.9m estimate. Gross margin was 62.3% vs our 61.1% estimate.
  • Adjusted EBITDA was EUR 8.5m, compared to our EUR 6.2m estimate. Adjusted EBIT was EUR 5.5m vs the EUR 2.9m/4.0m Evli/consensus estimates. Strong growth and gross margin helped profitability, while an increase in fixed costs had a weakening impact on earnings.
  • Marimekko left its guidance unchanged and expects 2021 revenue to be higher than previous year and adjusted EBIT margin to be approximately on a par with or higher than in the previous year. In our opinion the guidance now appears a bit on the cautious side, especially considering Marimekko has indicated the majority of its revenue and earnings this year will be generated in H2.

Marimekko - 70 years old and still in fashion

21.05.2021 | Company update

Marimekko showed its strengths once again and delivered very strong Q1 figures. Development was good internationally but also in Finland. Adj. EBIT was clearly above expectations at EUR 5.6m. We have increased our FY21E-23E estimates and keep our rating “BUY” with TP of EUR 63 (58.2).

Clear estimates beat in Q1

Marimekko delivered a very strong Q1 result. Net sales increased by 17% y/y to EUR 29.1m vs. EUR 27.7m/27.6m Evli/cons. Sales were boosted by good wholesale sales development in APAC region, Finland and Scandinavia as well as increased licensing income in EMEA. Net sales in Finland amounted EUR 14.5m (7% y/y) vs. our EUR 14.0m and international sales were EUR 14.6m (29% y/y) vs. our EUR 13.7m. The continuing pandemic situation continued to hamper customer flows in stores, but retail sales were supported by good growth in online sales. Marimekko’s adj. EBIT was 130-140% above expectations at EUR 5.6m. Profitability was supported by increased net sales, improved relative sales margin and reduced fixed costs. EPS was EUR 0.55 vs. EUR 0.21/0.18 Evli/cons.

Aiming to accelerate international growth

Marimekko has constantly been able to deliver solid results, even during times like this. The company has a strong positioning in Finland, but its brand awareness has increased internationally as well which was shown also in Q1 figures. Marimekko plans to accelerate its long-term international growth in 2021 and to invest especially in digital business, seamless omnichannel customer experience, sustainability and brand awareness. This year, the company turns 70 years old, and this should increase brand visibility even more. Despite the strong performance in Q1, we expect a peak in sales once the vaccination coverage increases and restrictions are being lifted. Even though Marimekko had an excellent start of the year, the company indicated that majority of its net sales and earnings will be generated during H2’21E.

“BUY” with TP of EUR 63 (58.2)

Marimekko expects 2021E adj. EBIT margin to be approx. on a par with last year or higher. Net sales are expected to increase from last year. We expect revenue growth of 12% in 21E and 8% in 22E and adj. EBIT margins of 16.7% and 17.0%. On our estimates, the company trades with 21E-22E EV/EBIT multiple of 19.9x and 17.9x which is 40-50% discount compared to the luxury peers. We keep our rating “BUY” with TP of EUR 63 (58.2).

Marimekko - Clear estimates beat

20.05.2021 | Earnings Flash

Marimekko’s Q1 result was very strong and it clearly outpaced the expectations. Net sales increased by 17% and were EUR 29.1m vs. EUR 27.7m/27.6m Evli/cons. Sales were driven by good wholesale sales development in APAC region, Finland and Scandinavia as well as increased licensing income in EMEA. Adj. EBIT was EUR 5.6m vs. EUR 2.4m/2.3m Evli/cons.

  • Finland: revenue was EUR 14.5m vs. EUR 14.0m Evli view. Revenue increased by 7% y/y and was driven by good wholesale sales development. Nonrecurring promotional deliveries in particular contributed to an increase in wholesale sales in Finland.
  • International: revenue increased by 29% y/y and was EUR 14.6m vs. EUR 13.7m Evli view. Sales were driven by good wholesale sales development in APAC region and Scandinavia as well as increased licensing income in EMEA. Sales growth in APAC region was partly due to the transfer of some of the wholesale deliveries for Q4’20 to Q1’21.
  • Q1 adj. EBIT was clearly above expectations at EUR 5.6m (19.3% margin) vs. EUR 2.4m/2.3m (8.7%/8.3% margin) Evli/cons. Profitability was boosted by increased sales, improved relative sales margin as well as reduced fixed costs.
  • Q1 adj. EPS was EUR 0.55 vs. EUR 0.21/0.18 Evli/cons.
  • 2021E guidance: net sales are expected to increase from last year. Adj. EBIT margin is expected to be approx. on a par with last year or higher.

Marimekko - Improved outlook

17.05.2021 | Preview

Marimekko upgraded its 21E earnings guidance last week as sales outlook for the full year has improved. The company said that Q1 has been very strong. We have increased our 21E adj. EBIT estimate by ~9% and keep our rating “BUY” with TP of EUR 58.2 (57). Marimekko reports its Q1 result on this week’s Thursday.

Upgraded guidance due to improved sales outlook

Marimekko upgraded its 21E earnings guidance last week. The company now expects 21E adj. EBIT margin to be similar compared to last year (2020: 16.3%) or higher. Sales guidance remains unchanged and the company expects 21E sales to be higher than last year. Based on the earlier guidance given in February, the company expected 21E adj. EBIT margin to be in line with the company’s long-term target of 15%. According to Marimekko, the upgrade is due, in particular, to improved sales outlook for the full year, supported by a very strong Q1’21. Despite the strong figures in Q1, the company still estimates that the major portion of net sales and earnings are generated during H2’21 due to the seasonality of Marimekko’s business.

We have increased our 21E adj. EBIT estimate by ~9%

We would have hoped more detailed information about the improved sales outlook, but we expect to get more color on this during the Q1 result. Earlier, we expected 21E sales growth of 9.5% y/y and adj. EBIT margin of 15.2% (EUR 20.5m). As a result of the guidance upgrade, we have increased our estimates, especially our Q1’21E estimates. We increased our Q1E sales expectation by ~2% and expect sales of EUR 28m while we have more than doubled our adj. EBIT expectation. We now expect Q1’21E adj. EBIT of EUR 2.4m (8.7% margin). We have increased our FY21E adj. EBIT estimate by ~9% and we expect it to be EUR 22.4m (16.5% margin) while we expect sales growth of ~10% y/y.

“BUY” with TP of EUR 58.2 (57)

Marimekko reports its Q1 result on this week’s Thursday, 20th of May. On our estimates, the company trades with 21E-22E EV/EBIT multiple of 19.0x and 17.1x which is ~50% discount compared to the luxury peers. We keep “BUY” with TP of EUR 58.2 (57) ahead the Q1 result.

Marimekko - Solid performance continues

19.02.2021 | Company update

Marimekko’s Q4 result met the expectations with revenue growth of 8% y/y. Adj. EBIT improved by ~90%. The outlook remains good despite the uncertainties related to the pandemic. We keep our rating “BUY” with TP of EUR 57 (50).

Q4 result met the expectations

Marimekko’s Q4 result was somewhat in line with the expectations. Revenue increased by 8% y/y to EUR 37m (38m/38m Evli/cons.). Revenue was driven by good wholesale sales development in Finland, EMEA and Scandinavia. Customer numbers in stores declined as the pandemic situation worsened towards the end of the year. This impacted negatively on retail sales. On the other hand, retail sales were supported by strong growth in online sales. Adj. EBIT amounted EUR 5.8 (+90% y/y) vs. 5.0m/4.7m Evli/consensus. Profitability was boosted by increased sales and decreased fixed costs but at the same time, gross margin declined, resulting from increased online sales. 2020 dividend proposal is EUR 1.0 (1.2/1.1 Evli/cons.).

The outlook remains bright

Fashion industry has faced enormous losses due to the pandemic but despite the situation, the management of Marimekko has shown good capabilities of being able to adjust to the current environment. This reinforces our view of the company’s ability to grow profitably in the future as well. Marimekko is also benefiting from the changed consumer behavior where sustainability plays a big role. Marimekko expects sales in Finland and APAC-region to grow in 2021. Domestic wholesale sales will be boosted by nonrecurring promotional deliveries and a vast majority of those will take place in H2’21. Marimekko expects to open ~5-10 new stores and shop-in-shops in 2021 of which most openings will be in Asia.

“BUY” with TP of EUR 57 (50)

The ongoing pandemic situation is still impacting on Marimekko’s sales and we expect the situation to normalize in H2E. Marimekko expects 21E sales to increase from 2020 and adj. EBIT margin to be on a par with the long-term target of 15%. We have slightly increased our estimates and expect 21E sales of EUR 135m (+10% y/y) and adj. EBIT of EUR 20.5m (15.2% margin). On our estimates, the company trades with 21E-22E EV/EBIT multiple of 20.1x and 16.9x which is 50-70% premium compared to the premium peers. We see the premium acceptable due to the strong revenue and profitability development. We keep our rating “BUY” with TP of EUR 57 (50).

Marimekko - Good result despite the uncertainties

18.02.2021 | Earnings Flash

Marimekko’s Q4 result was somewhat in line with expectations. Net sales were EUR 37m (8% y/y) vs. EUR 38m/38m Evli/cons. Adj. EBIT was EUR 5.8m vs. EUR 5.0m/4.7m Evli/cons. 2020 dividend proposal is EUR 1.0 vs. EUR 1.20/1.10 Evli/cons.

  • Finland: revenue was EUR 23.2m vs. EUR 24.9m Evli view. Revenue increased by 6% y/y. Wholesale sales developed favorably and were boosted by non-recurring promotional deliveries.
  • International: revenue increased by 11% y/y and was EUR 14.1m vs. EUR 13.2m Evli view. Wholesale sales developed well also in EMEA and Scandinavia.
  • Q4 adj. EBIT was EUR 5.8m (15.5% margin) vs. EUR 5.0m/4.7m (13.1%/12.4% margin) Evli/cons. Profitability was boosted by increased sales and decreased fixed costs. On the other hand, relative sales margin declined due to higher logistics costs resulting from an increase in online sales.
  • Q4 adj. EPS was EUR 0.51 vs. EUR 0.46/0.43 Evli/cons.
  • 2020 dividend proposal is EUR 1.0 vs. EUR 1.20/1.10 Evli/cons. Dividend from 2019 is EUR 0.90.
  • 2021E guidance: net sales are expected to be higher than in the previous year. Adj. EBIT margin is expected to be approx. on a par with the long-term goal of 15%.

Marimekko - Strong momentum continues

11.12.2020 | Company update

Marimekko issued a positive profit warning yesterday. The company expects 2020E net sales to be approx. at the same level or slightly lower compared to 2019. Adj. EBIT is expected to be higher compared to last year. We have increased our estimates and keep our rating “BUY” with TP of EUR 50 (44).

New guidance due to better than expected sales trend

Marimekko raised its 2020E guidance in particular due to better than expected trend and improved outlook in the retail sales in Finland. The company now expects 20E net sales to be approx. at the same level or slightly lower compared to last year (2019: EUR 125m). Adj. EBIT is expected to be higher compared to the previous year (2019: EUR 17.1m). Previously, Marimekko expected 20E net sales to be lower compared to the previous year and adj. EBIT to be approx. at the same level or lower compared to last year. We expected 20E sales to decline by 3.5% y/y to EUR 121m and adj. EBIT of EUR 17.3m.

Appealing to consumers despite the uncertain times

The profit warning didn’t come as a total surprise as the company has constantly been able to appeal to consumers, even despite the uncertain times. The company indicated that most of the earnings for H2’20E were generated during Q3. The net sales accrual in H2E is expected to be more balanced between the third and the final quarter. We expect the campaign season has boosted especially Marimekko’s domestic sales. In addition, the Christmas season is ongoing, and the household consumption is more focused on domestic purchases this year. We expect this to have a positive impact on Marimekko’s domestic sales and expect good demand especially in home décor products. However, there are still uncertainties related to the pandemic situation and the customer flows in retail stores. It is also essential to maintain the operational reliability of the distribution centers and logistics.

“BUY” with TP of 50 (44)

We have increased our 20E sales expectation by ~3% and our adj. EBIT expectation by ~12%. We now expect 20E sales of EUR 124.4m (-0.8% y/y) and adj. EBIT of EUR 19.4m. On our estimates, the company trades with 20E-21E EV/EBIT multiples of 18.7x and 18.0x which is a clear discount compared to the luxury peers. We keep our rating “BUY” with TP of EUR 50 (44).

Marimekko - Outlook remains bright

02.12.2020 | Company report

Marimekko is a Finnish design and lifestyle company founded in 1951. The company’s largest market area is Finland followed by the APAC region. As we expect further earnings improvement potential via profitable, global growth, we keep our rating “BUY” with TP of EUR 44 (43).

A Finnish design and lifestyle company

Marimekko, founded in 1951 is a Finnish design and lifestyle company. The company is known for its unique colors and prints. The company’s product portfolio includes high-quality clothing, bags and accessories as well as home décor items ranging from textiles to tableware. The company aims to gain profitable growth via broader target audience. The company has approx. 150 stores across the world. Marimekko’s revenue CAGR in 2013-2019 was ~4.9 percent.

20E hampered by the pandemic but outlook remains good

Year 2020 started well but the Covid-19 quickly spread across the world and Marimekko was forced to close its retail stores temporarily in Finland as well as in other market areas. Despite of the challenging times, Marimekko performed relatively well during the lockdown. The company has benefited of having different product segments (i.e. consumers have spent more time at home which has increased the demand of home décor products while fashion sales have dropped). We expect Marimekko’s sales to decline by ~4 percent y/y in 20E. Given the circumstances, we consider this fairly good performance. We expect adj. EBIT to be on a par with last year, totaling EUR 17.3m. We expect revenue to grow by ~8 percent in 21E and ~6 percent in 22E. We expect Marimekko is set to reach its EBIT margin target of 15 percent by 22E.

“BUY” with TP of EUR 44 (43)

We value Marimekko by using valuation multiples. On our estimates, the company trades with 20E P/E multiple of 24.8x and EV/EBIT multiple of 17.9x. Hence the company trades with a discount compared to the premium and luxury peers. Correspondingly, the company trades with 21E P/E multiple of 20.7x and EV/EBIT multiple of 15.6x, which translates into a clear discount compared to the luxury peers. We keep our rating “BUY” with TP of EUR 44 (43).

Marimekko - Fights victoriously against the virus

05.11.2020 | Company update

Marimekko’s Q3 result outpaced the expectations as net sales increased by 10% y/y despite of the challenging times. Adj. EBIT increased by ~35% y/y and totaled EUR 10.5m. We have slightly increased our 20E-22E estimates and keep our rating “BUY” with TP of EUR 43 (42).

Strong growth in Q3

Marimekko delivered extremely strong Q3 result despite of the challenging times. Net sales were EUR 38.0m (+10% y/y) vs. EUR 36.0m/35.3m Evli/cons. Sales growth was driven by good development in wholesale sales in Finland and EMEA. In Finland, wholesale sales included nonrecurring promotional deliveries. Also, retail sales included unrecognized sales from Q2 (EUR ~1m). Further, online sales continued to perform well. Marimekko’s Q3 adj. EBIT totaled EUR 10.5m vs. EUR 9.1m/8.4m Evli/cons. Profitability was boosted by good sales growth and decreased fixed costs. Fixed costs were also reduced by subsidies granted in various countries to mitigate the negative business impacts of the COVID-19.

Fighting against the pandemic

Fashion industry has been suffering from the COVID-19 but so far Marimekko has survived relatively well in the turbulence. The company benefits of having different product lines as the growth in home decor products has been strong in Q3 (+44% y/y) which has compensated the drop in sales in fashion and bags & accessories. The final quarter is important for Marimekko as several sales campaigns take place during the quarter. We expect fairly good development in Finland as currently the household consumption is more focused on domestic purchases. However, sales are dependent on the pandemic situation and the trend in customer numbers in retail stores. International sales are also heavily impacted by the development of the pandemic.

“BUY” with TP of EUR 43 (42)

Marimekko expects 20E net sales to be lower than in the previous year. Adj. EBIT is expected to be approx. at the same level or lower than in 2019. We have made small adjustments to our estimates after the result and expect 20E sales of EUR 121m (-3.5% y/y). We expect adj. EBIT to be in line with last year (EUR 17.3m). In 21E, we expect revenue growth of ~8% y/y and profitability to further improve. On our estimates, the company trades at 20E-21E EV/EBIT multiple of 18.4x and 15.9x which is a clear discount compared to the luxury peers. We keep our rating “BUY” with TP of EUR 43 (42).

Marimekko - Q3 result outpaced expectations

04.11.2020 | Earnings Flash

Marimekko’s Q3 result outpaced the expectations. Net sales were EUR 38.0m (10% y/y) vs. EUR 36.0m/35.3m Evli/cons. Adj. EBIT was EUR 10.5m vs. EUR 9.1m/8.4m Evli/cons. Marimekko expects 20E net sales to be lower than in the previous year and comparable operating profit is estimated to be approx. at the same level or lower than in the previous year.

  • Finland: revenue was EUR 23.0m vs. EUR 21.7m Evli view. Revenue increased by 17% y/y. Revenue was boosted by increased wholesale sales. The increase in wholesale sales was partly due to nonrecurring promotional deliveries.
  • International: revenue increased by 2% y/y and was EUR 15.0m vs. EUR 14.3m Evli view. Wholesale sales developed well also in EMEA.
  • Q3 adj. EBIT was EUR 10.5m (27.7% margin) vs. EUR 9.1m/8.4m (25.3%/23.8% margin) Evli/cons. Profitability was boosted by increased sales and decreased fixed costs. Fixed costs were also reduced by subsidies granted in various countries to mitigate the negative business impacts of the coronavirus pandemic. On the other hand, relative sales margin declined.
  • Q3 EPS was EUR 0.98 vs. EUR 0.86/0.81 Evli/cons.
  • 2020E guidance: group net sales are expected to be lower than in the previous year and comparable operating profit is estimated to be approx. at the same level or lower than in the previous year.

Marimekko - Outlook brightens

21.09.2020 | Company update

Marimekko announced a guidance for 2020E and expects net sales to be lower compared to last year and adj. EBIT to be approx. at the same level or lower than last year. Due to the improved outlook we have increased our estimates. We upgrade to “BUY” (“HOLD”) with new TP of EUR 42.0 (32.0).

Guidance for 20E announced

Marimekko withdrew its earlier 20E guidance in March, solely due to the estimated impacts of the COVID-19. The company stated during its Q2 result that the coronavirus will have a significant negative impact on sales and profitability in 20E. Now the company has announced a guidance for 20E and expects net sales to be lower than in the previous year (EUR 125.4m) and adj. EBIT to be approx. at the same level or lower than in the previous year (EUR 17.1m).

Better than expected trend in sales

According to Marimekko, the improved outlook is mainly due to better than expected trend of Finnish retail sales during the summer and improved outlook of wholesale sales but also due to better fixed cost savings during the rest of 20E. The company however highlights that there are still significant uncertainties caused by the COVID-19. The travel restrictions remained tight throughout the summer thus it is likely that the money normally spent on traveling has now been put into other things. Additionally, during the pandemic, the trend of domesticity has increased among Finnish consumers which should also have a positive impact on domestic sales. According to the company, major portion of its net sales and earnings for H2E will be generated during Q3E.

Upgraded to “BUY” (“HOLD”) with TP of EUR 42.0 (32.0)

We have increased our 20E sales expectation by ~2% and our 20E adj. EBIT estimate by ~21%. In our view, Marimekko’s mid-term outlook is good despite of the challenging times. On our estimates, the company trades at 20E-21E EV/EBIT multiple of 18.6x and 16.4x which translates into a clear discount (~50%) compared to the luxury peers and at 20E-21E P/E multiple of 25.0x and 21.6x – also a clear discount compared to the luxury peers. We upgrade to “BUY” (“HOLD”) with TP of EUR 42.0 (32.0).

Marimekko - First wave survived

14.08.2020 | Company update

Considering the circumstances, Marimekko delivered relatively good Q2 result. Net sales decreased by 20% y/y and amounted EUR 23.3m vs. EUR 18.3m/19.8m Evli/cons. Adj. EBIT clearly beat expectations and was EUR 2.7m vs. EUR 0.6m/0.5m Evli/cons. We keep our rating “HOLD” with TP of EUR 32 (24)

Relatively good result, considering the circumstances
Marimekko’s Q2 net sales were down by 20% y/y and totaled EUR 23.3m (EUR 18.3m/19.8m Evli/cons). Especially retail sales in Finland, Scandinavia and North America faced headwind amid the pandemic but also wholesale sales in the APAC region declined. At the same time, licensing income in the APAC region boosted sales. Adj. EBIT clearly beat estimates and was EUR 2.7m vs. EUR 0.6m/0.5m Evli/cons. Profitability was weighed down by lower net sales and declined relative sales margin (sales margin was negatively impacted by increased logistics costs and bigger discounts). In the early stage of the pandemic situation, the company implemented cost saving measures resulting in decreased fixed costs in Q2. Guidance for 20E was not given.

Sales and earnings depending on the pandemic situation
Even though the Q2 result beat the expectations, the uncertainties hover over the H2’20. Despite of the strong online sales growth (more precise information not disclosed), it is vital especially for the retail stores to remain open. In the case of new infection waves, we expect the customers to become even more price sensitive and cautious with their purchases, impacting negatively on sales. This could also have an impact on the partners’ behavior. However, we expect the mentality of “support your local” among the Finnish consumers to continue, supporting domestic sales together with nonrecurring promotional deliveries of which majority will take place in H2’20E. Marimekko is also planning to reorganize its operations and initiates cooperation negotiations. The aim is to seek annual cost savings of approx. EUR 1.5m.

“HOLD” with TP of EUR 32.0 (24.0)
After the Q2 result we have increased our 20E revenue estimate by ~6% (EUR 116m) and our adj. EBIT estimate by ~27% (EUR 13.7m). We have also slightly increased our 21E-22E estimates. However, we note that there are significant uncertainties not only with our 20E estimates but also with our 21E estimates. On our estimates, Marimekko trades at 20E-21E EV/EBIT multiple of 18.1x and 13.5x, which translates into a clear discount compared to the luxury peers. We keep our rating “HOLD” with TP of EUR 32.0 (24.0).

Marimekko - Q2 result better than anticipated

13.08.2020 | Earnings Flash

Marimekko’s Q2 result beat the consensus expectations. Net sales were EUR 23.3m (-20% y/y) vs. EUR 18.3m/19.8m Evli/cons. Adj. EBIT was clearly above estimates at EUR 2.7m vs. EUR 0.6m/0.5m Evli/cons. Marimekko expects the coronavirus to have a significant negative impact on net sales and profitability in 2020. Guidance for ’20E was not given at this point.

  • Finland: revenue was EUR 11.4m vs. EUR 10.4m Evli view. Revenue decreased by 32% (retail sales -41% y/y).
  • International: revenue declined by 3% y/y and was EUR 11.9m vs. EUR 7.9m Evli view. Retail sales declined especially in North America and Scandinavia. Wholesale sales decreased especially in the APAC region. On the other hand, increased licensing income in the Asia-Pacific region boosted sales.
  • Q2 adj. EBIT was EUR 2.7m (11.4% margin) vs. EUR 0.6m/0.5m (3.2%/2.7% margin) Evli/cons. Decreased net sales and weaker relative sales margin had a negative impact on profitability. On the other hand, fixed costs decreased significantly, resulting from the saving program.
  • Q2 EPS was EUR 0.27 vs. EUR 0.04/0.03 Evli/cons.
  • Marimekko is also planning to reorganize its operations and initiates cooperation procedure as the company seeks to achieve annual costs savings of approx. EUR 1.5m.
  • The company expects the coronavirus to have a significant negative impact on net sales and profitability in 2020 but guidance for ’20 was not given.

Marimekko - Consumer behavior likely to change

15.05.2020 | Company update

Marimekko’s Q1 result was below expectations as net sales declined by 8% y/y, amounting to EUR 24.9m (27.9m/25.4m Evli/cons). Adj. EBIT was EUR 1.2m (1.7m/1.4m Evli/cons). The coronavirus hampered sales in all Marimekko’s market areas. We downgrade to “HOLD” (“BUY”) with TP of EUR 24 (28).

All market areas were impacted by the coronavirus

COVID-19 hampered all Marimekko’s market areas which led to a decline in net sales (-8%). Net sales totaled EUR 24.9m (27.9m/25.4m Evli/cons). Finland was the only market area with a positive sales development (+6%) in Q1. Net sales in the second largest market area APAC, declined by 28% y/y. Wholesale sales in APAC fell by -30% y/y not only due to the coronavirus but also as the corresponding figures in the comparison period were high due to an exceptional delivery pattern. Relative sales margin was affected by increased logistics costs and nonrecurring expenses resulting from the relocation of the company’s main warehouse. Decline in sales and weakened relative sales margin weighed down adj. EBIT which was EUR 1.2m vs.  EUR 1.7m/1.4m Evli/cons.

Consumers likely to become more cautious

Our expectations for the upcoming months are not high as the movement restrictions and the temporary closure of stores will no doubt have a significant negative impact on Marimekko’s sales and profit. The company’s online store supports the business in some level as the online sales have increased significantly, though the management did not provide information regarding the magnitude of this. The outlook for ’20 wholesale sales in Asia is affected by the temporary closure of partner-owned stores and changing customer sentiment. At the same time, domestic wholesale sales in ’20 are boosted by nonrecurring promotional deliveries, which will be mainly taking place during H2. Going forward, the globally weakening economic outlook and declining purchasing power will have a negative impact on consumer behavior. We expect retail sales and wholesale sales to decline by 12% and 11%, respectively in 20E.

“HOLD” (“BUY”) with TP of EUR 24 (28)

We have cut our 20E sales expectation by ~4% and adj. EBIT expectation by ~8%. The company expects COVID-19 to have a significant negative impact on sales and profit in ‘20 but did not provide more detailed guidance at this point. Due to the weakening economic outlook we have also cut our 21E-22E sales expectation by 7-9% and adj. EBIT expectation by 10-12%. On our estimates, Marimekko trades at 20E-21E EV/EBIT multiple of 17.3x and 10.3x, which translates into 50-60% discount compared to the luxury peers. We downgrade to “HOLD” (“BUY”) with TP of EUR 24 (28).

Marimekko - Decline in sales in Q1

14.05.2020 | Earnings Flash

Marimekko’s Q1 result was below expectations as net sales decreased by 8%, amounting EUR 24.9m vs. EUR 27.9m/25.4m Evli/cons. Adj. EBIT was EUR 1.2m vs. EUR 1.7m/1.4m Evli/cons. Marimekko expects the coronavirus to have a significant negative impact on net sales and profitability in 2020. Guidance for ’20 was not given at this point.

  • Finland: revenue was EUR 13.6m vs. EUR 13.3m Evli view. Revenue increased by 6%.
  • International: revenue was EUR 11.3m vs. EUR 14.6m Evli view. Revenue declined by 21%. The decline in wholesale sales in APAC was due to an exceptional delivery pattern in the comparison period but the coronavirus had also a negative impact as some expected reorders were not placed.
  • Retail sales were at the same level as in the comparison period but wholesale sales declined by 13% and licensing income by 71%.
  • Q1 adj. EBIT was EUR 1.2m (4.6% margin) vs. EUR 1.7m/1.4m (5.9%/1.4% margin) Evli/cons. Lower sales and a decline in relative sales margin had a weakening impact on result whereas lower fixed costs had a positive impact.
  • Q1 EPS was 0.02 EUR vs. EUR 0.07/0.10 Evli/cons.
  • The company expects the coronavirus to have a significant negative impact on net sales and profitability in 2020. Guidance for ’20 was not given at this point.

Marimekko - COVID-19 impacting sales and profit

26.03.2020 | Company update

Marimekko withdrew its guidance for 20E as the consumer demand in all the market areas has dropped due to COVID-19. We now expect 20E sales to decline by 10% y/y and adj. EBIT of EUR 11.7 (-32% y/y) but we note that there are significant uncertainties especially with our short-term estimates. We upgrade to “BUY” (“HOLD”) with TP of EUR 28 (44).

Weakened consumer demand outlook due to COVID-19
Marimekko withdrew its 20E guidance as the situation around COVID-19 has clearly weakened the consumer demand outlook in all Marimekko’s market areas (prev. 20E sales are expected to increase from the previous year and adj. EBIT is expected to be at the same level or higher than on the previous year). At the current stage, the company doesn’t give a guidance for 20E. However, if the situation is prolonged, it will have significant impacts on the company’s sales and profitability. As a result of the current situation, Marimekko is planning to adjust its operations and initiates cooperation negotiations. Marimekko has also changed its proposal for the ’19 dividend payment (prev. dividend proposition of EUR 0.90) and proposes that the AGM would authorize the Board of Directors to decide on a dividend payment of a max. of EUR 0.90 per share to be distributed in one or several instalments at a later stage when the company is able to make a more reliable estimate on the impacts of COVID-19 to the company’s business.

Expecting a significant drop especially in retail sales
As most of the market areas have some level lockdowns and thus many stores are being closed, we expect negative impacts especially on Q2’20E sales. We have lowered our Q2’20E sales estimate by ~44% and our EBIT estimate by ~82%. We expect retail sales to face the hardest hit due to the rapid drop in consumer numbers. We don’t expect as dramatical decline in wholesale sales as the buyers (of distribution channels) should have already ordered the spring/summer lines. However, it is difficult to estimate how the situation will impact on H2’20E sales. We also expect negative impacts on production and supply chain in H1’20E.

“BUY” (“HOLD”) with TP of EUR 28 (44)
We’ve lowered our 20E sales expectation by 17% and adj. EBIT estimate by 42%. We expect 20E sales of EUR 113 (-10% y/y) and adj. EBIT of EUR 11.7 (-32% y/y). We note that there are significant uncertainties with our short-term estimates but we see Marimekko’s mid-term investment case unchanged and positive as we see Marimekko is able to achieve higher sales and margins after this shock. In normal circumstances, Marimekko also offers an attractive dividend yield. On our estimates, Marimekko trades at 20E-21E EV/EBIT multiple of 17.6x and 10.2x which translates into 22-40% discount compared to the luxury peers. We upgrade our rating to “BUY” (“HOLD”) with TP of EUR 28 (44).

Marimekko - Investments into growth continue

14.02.2020 | Company update

Marimekko delivered good Q4 result. Sales grew by 17% y/y to EUR 34.7m (Evli 34.6m). Sales growth was strong especially in Finland and APAC region. Adj. EBIT was EUR 3.0m (Evli 2.9m). We keep our rating “HOLD” with TP of EUR 44 (39).

Q4 revenue driven by strong sales in Finland

Marimekko’s Q4 net sales amounted to EUR 34.7m (17% y/y) vs. our EUR 34.6m (cons. 34.3m). Sales performance was strong especially in Finland, driven by increased retail and wholesale sales (retail LFL growth 21% y/y). APAC region performed well also, as revenue was boosted by increased wholesale sales and licensing income. Q4 adj. EBIT was EUR 3.0m vs. our EUR 2.9 (cons. 3.0m). Profitability was driven by strong sales but weighed down by increased fixed costs. Proposed ’19 dividend of EUR 0.90 was below expectations (Evli/cons EUR 1.14/1.08).

Expecting a strong year in home market

We expect the good performance in Finland to continue in ‘20E, driven by broader target audience. Domestic wholesale sales are expected to be substantially higher than in ‘19, due to nonrecurring promotional deliveries. We expect ‘20E sales growth of 12% y/y in Finland, representing some 58% of Marimekko’s total sales in ‘20E. We also expect sales to increase in APAC region, though the coronavirus and political uncertainties could have a negative impact on sales. The actions taken to control the grey export cases in APAC region will also have an impact on sales and result. We expect APAC ‘20E sales growth of 2.5% y/y (H2’19 sales included nonrecurring licensing income of EUR 1.6m).

Increased investments into growth

We expect profitability improvement of ~12-18% y/y in ‘20E-‘21E, supported by strong sales growth and improved gross margin. According to the company, investments into growth will be higher in ‘20E, resulting in increase in personnel and marketing expenses. Store network will be expanded by ~10 new stores and shop-in-shops and some existing stores will be renewed. The company will also develop further its digital business and IT systems. We expect total OPEX to increase by ~10% y/y, hampering profitability development.

“HOLD” with TP of EUR 44 (prev. EUR 39.0)

We have slightly increased our ‘20E sales expectation and expect sales growth of 9.2% y/y (136.9m) while we expect adj. EBIT of EUR 20.1m (17.5% y/y). We see that Marimekko is able to achieve and maintain higher margins than the premium goods peer group, which justifies higher multiples similar to our luxury goods peer group median. On our estimates, Marimekko trades at ‘20E-‘21E EV/EBIT multiple of 16.7x and 14.6x which translates into ~20% discount compared to the luxury peer group. We keep our rating “HOLD” with TP of EUR 44 (EUR 39).

Marimekko - Q4 result as expected

13.02.2020 | Earnings Flash

Marimekko’s Q4 net sales increased by 17% and amounted to EUR 34.7m vs. EUR 34.6m/34.3m Evli/cons. Adj. EBIT was EUR 3.0m vs. EUR 2.9m/3.0m Evli/cons. In 2020E, revenue is expected to be higher than in the previous year while adj. EBIT is estimated to be approximately at the same level or higher than in the previous year.

  • Finland: revenue was EUR 21.9m vs. EUR 21.0m Evli view. Revenue increased by 20%.
  • International: revenue was EUR 12.8m vs. EUR 13.6m Evli view. Revenue increased by 12%.
  • Retail sales increased by 16%. Wholesale sales increased by 15%. Growth came primarily from retail and wholesale sales in Finland as well as increased wholesale sales and licensing income in the Asia-Pacific region.
  • Q4 adj. EBIT was EUR 3.0m (8.7% margin) vs. EUR 2.9m/3.0m (8.4%/8.8% margin) Evli/cons. Profitability was boosted by sales growth whereas higher fixed costs had a negative impact on result.
  • Q4 EPS was EUR 0.26 vs. EUR 0.29/0.28 Evli/cons.
  • Proposal for ’19 dividend: EUR 0.90 vs. EUR 1.14/1.08 Evli/cons.
  • Guidance for 2020E: revenue is expected to be higher than in the previous year while adj. EBIT is estimated to be approximately at the same level or higher than in the previous year.

Marimekko - Upswing expected to continue in Q4

04.02.2020 | Preview

Marimekko reports its Q4’19 result on 13th of Feb. We expect Q4 sales of EUR 34.6m (16.5% y/y) and adj. EBIT of EUR 2.9m. We have kept our estimates largely intact and expect ’19 dividend of EUR 1.14 per share. We keep our rating “HOLD” with TP of EUR 39.0 intact ahead of Q4.

Christmas sales expected to boost revenue growth

Marimekko’s upswing has continued in ’19 driven by positive sales development in Finland and increased licensing income from APAC region, resulting in two guidance upgrades in July and October. We expect Q4’19E sales to grow by 16.5% y/y (EUR 34.6m), driven by Christmas sales and representing some 28% of total year-end sales while we expect adj. EBIT to nearly double from Q4’18 to EUR 2.9m (Q4’18: 1.6m) due to improved gross profit and lower relative share of fixed costs. We expect good sales performance to continue in Finland (+15% y/y) but also APAC region (+27% y/y).

A sequel of the UNIQLO collaboration

Marimekko gave its first positive profit warning for ‘19E ahead of Q2 due to increased licensing income from APAC region. Licensing income of EUR 1.2m was booked in Q3 and shortly after the result it was revealed that the collaboration was with UNIQLO, a Japanese global apparel retailer, with who Marimekko partnered also in 2018. The new fall/winter collection was launched in late November ‘19 in all UNIQLO markets except in Japan. We thus see more far reaching positive impacts resulting from the partnership as the collaboration rises Marimekko’s brand recognition globally.

“HOLD” with TP of EUR 39.0 intact

Based on the second guidance upgrade given in October, sales are expected to increase from ‘18 while comparable operating profit is expected be higher than in ’18, amounting approx. EUR 17m. We have made only small adjustments to our estimates and expect 2019E sales of EUR 125.3m (+12% y/y) while our adj. EBIT expectation is in line with the guided EUR 17m (FY18: 12.2m). We expect Marimekko to propose a dividend of EUR 1.14m per share in ‘19. In ‘20E, we expect ~8% sales growth and further EBIT improvement (~21% y/y), driven by positive gross margin development. We keep our rating “HOLD” with TP of EUR 39.0 intact ahead of Q4.

Marimekko - Strong outlook ahead

07.11.2019 | Company update

Marimekko delivered good Q3 result, as expected. We saw some concrete actions to reach a wider target audience as the company launched its first streetwear collection KIOSKI. We have slightly increased our estimates for 19E-21E. We keep our rating “HOLD” with TP of EUR 39 (30).

Q3 earnings supported by increased sales both in Finland and international

Marimekko’s Q3 result was strong, as expected. Revenue grew by 15% and was EUR 34.5m vs. EUR 34.7m/33.8m Evli/consensus. Sales is Finland grew by 14% while international sales increased by 17%. Marimekko’s sales grew in all the market areas, growth being particularly good in Finland and APAC region. In Finland, growth was driven by retail sales (16% y/y). In APAC region, retail sales increased by 14% and wholesale sales by 9%. Also, increased licensing income boosted sales in APAC. Comparable operating profit was slightly higher than consensus estimates but in line with our estimate at EUR 7.8m resulting in EBIT margin of 22.7% (vs. EUR 7.8m/7.6m Evli/consensus). Earnings development was boosted by the good growth in net sales but at the same time profitability was impacted by increased fixed costs which were partly due to the share-based incentive scheme for management.

Successful launches appeal to a wider target audience

In Jan-Sept, Marimekko’s sales development has been good especially in Finland (9% y/y) and APAC region (14% y/y), which are the two main markets for the company but also in EMEA (25% y/y). Marimekko’s brand continues strong in Finland and the company has been able to reach new customer groups while keeping the existing customers, resulting higher sales. Marimekko’s first (unisex) streetwear collection KIOSKI, which was launched in Q3 is an example of the actions the company has taken in order to appeal to a wider audience. The launch of the collection was successful and we see the collection to appeal well to a younger customer base in particular. In addition to Marimekko KIOSKI, the new leather bag line supports the company’s strategy as bags and accessories (share of net sales ~26%) provide a convenient way to introduce the brand to new customers. In Q3, Marimekko’s prints were also part of an anniversary collection by Target, bringing a lot of visibility in the US. During Jan-Sept, most of the company’s net sales were generated in Finland (54%) while 21% of net sales came from APAC region. Finland and APAC both represent ~37% of brand sales.

Growth strategy to support outlook for 19E-21E

We expect 19E revenue to grow by 10% y/y in Finland and 14% y/y internationally. In our assumptions, Finland represents ~55% of the total revenue in 19E-20E. We expect retail and wholesale sales to develop favorably in the future resulting from increasing global brand awareness and wider customer base. Increasing retail sales should also support gross margin improvement. We have slightly adjusted our 20E-21E outlook by increasing our revenue expectation by some 1% while increasing our 20E-21E EBIT expectation by 0.5% and 5.7%. We foresee revenue growth of ~8% in 20E-21E. Marimekko’s target is to achieve operating profit margin of 15% which we see achievable given the growth outlook. We also expect increasing e-commerce to support growth.

“HOLD” with TP of EUR 39 (30)

We expect Marimekko’s 2019E sales to grow by 12% and to total EUR 125.3m. We have increased our EBIT expectation to EUR 17.0m (prev. EUR 16.8m), resulting in EBIT margin of 13.6% (2018: 10.9%). We see that Marimekko is able to achieve and maintain higher margins than the premium goods peer group, which justifies higher multiples similar to our luxury goods peer group median. On our estimates, Marimekko trades at 19E-20E EV/EBIT multiple of 18.8x and 15.4x which translates into 14-18% discount compared to the luxury goods peer group median. Our target price translates into EV/EBIT multiple of 19.6x and 16.0x on our 19E-20E estimates, which still are below the EV/EBIT multiples of Marimekko’s luxury goods peer group. We keep our rating “HOLD” with TP of EUR 39 (prev. EUR 30).

Marimekko - Q3 result in line with expectations

06.11.2019 | Earnings Flash

Marimekko’s Q3 net sales increased by 15% and was EUR 34.5m vs. EUR 34.7m/33.8m Evli/cons. Adj. EBIT was EUR 7.8m vs. EUR 7.8m/7.6m Evli/cons. Sales grew in all the market areas which boosted earnings development. Marimekko reiterated its guidance for 2019E.

  • Finland: revenue was EUR 19.7m vs. EUR 19.6m Evli view. Revenue increased by 14%. Retail sales increased by 16%. Wholesale sales increased by 9%.
  • International: revenue was EUR 14.8m vs. EUR 15.1m Evli view. Revenue increased by 17%. Retail sales increased by 15% and wholesale sales increased by 4%.
  • Net sales growth was generated primarily by Finnish retail and wholesale sales as well as licensing income and wholesale sales in the APAC region.
  • Q3 adj. EBIT was EUR 7.8m (22.7% margin) vs. EUR 7.8m/7.6m (22.5%/22.5% margin) Evli/cons. Profitability was boosted by sales growth but at the same time higher fixed costs impacted negatively on profitability.
  • Q3 EPS was EUR 0.79 vs. EUR 0.77/0.73 Evli/cons.
  • Guidance for 2019: net sales in 2019E are forecasted to be higher than in the previous year and comparable operating profit is expected to be higher than in the previous year, amounting to approximately EUR 17m.

Marimekko - Raises earnings outlook for FY19E

15.10.2019 | Company update

Marimekko updated its 2019E guidance yesterday. The company expects 2019E comparable operating profit to be higher than in the previous year, approximately of EUR 17m. The company reiterated its guidance for FY19E revenue; revenue is expected to be higher than in the previous year. Marimekko will report its Q3 result on November 6th. We retain our rating HOLD with TP of EUR 30.

Updated guidance for 2019E

Marimekko raised its earnings estimates for FY19E and reiterated its FY19E revenue guidance. According to the updated outlook, Marimekko expects FY19E comparable operating profit to be higher than in the previous year, amounting to approximately EUR 17 million (previous guidance; comparable operating profit is expected to amount maximum of EUR 15 million). This is mainly due to stronger than estimated sales growth and improved sales outlook in Finland but also better than estimated trend in relative gross margin. Marimekko did not provide much information other than that, so we wait for more color in the Q3 report.

We expect increase in sales in H2’19

We expect Marimekko’s H2’19 net sales to be EUR 69.4 million (16.4% y/y) while we expect H2’19 adj. EBIT to be EUR 10.5 million (H2’18 adj. EBIT of EUR 7.9m), resulting in EBIT margin of 15.1% (H2’18 EBIT margin of 13.3%). We expect sales and profitability to increase especially in Finland and APAC due to stronger sales growth in Finland and higher license revenue from APAC. We also expect the holiday season in the last quarter to have a considerable impact on Marimekko’s total sales in 2019E.

We maintain “HOLD” with TP of EUR 30

We have updated our estimates after the updated guidance. We have increased our 2019E revenue expectation and expect 2019E sales to total EUR 125.6m (previous: EUR 123.4m). We expect 2019E adj. EBIT of EUR 16.8m (previous: EUR 14.7m) resulting in EBIT margin of 13.4% We maintain our rating “HOLD” with TP of EUR 30.

Marimekko - Growth strategy expected to succeed

19.08.2019 | Company update

Marimekko’s H1 has been impressive and we expect the good momentum to continue throughout the year. The company has been able to target broader audience and license sales in APAC is expected to increase in H2, which should support revenue growth. We keep “HOLD” with TP of EUR 30 (26).

Strong Q2 earnings

Marimekko’s Q2 revenue was in line with expectations at EUR 29.1m vs. EUR 31.1m/29.8m Evli/cons. Revenue growth was good especially in Finland where comparable retail sales increased by 17% y/y and totaled EUR 16.8m vs. 16.7m Evli view. Also, growth in wholesale sales in EMEA region was good. Wholesale sales in Finland decreased by 18% y/y as there were large non-recurring wholesale deliveries in Q2’18. International revenue was EUR 12.4m vs. EUR 14.4m Evli view. Adj. EBIT was EUR 3.7m vs. EUR 3.5m/3.2m Evli/cons. Earnings were supported by increased sales and gross margin improvements, which were impacted by moderate sale campaigns and increased retail sales.

Broader customer segments support growth

Marimekko had a strong H1 as the company’s revenue grew by ~8% and adj. EBIT by ~46 % y/y. We expect the good momentum to continue as the company has been able to target wider customer segments and seeks to improve growth through online store, partner-led retail in Asia as well as by increasing the sales/m2 in its physical stores. Marimekko has approximately 150 stores in 15 countries, of which most of the stores are outside of Finland and the company aims to open 10 new shops or shop-in-shops in 2019. In APAC, Japan is the largest market area but the company sees growth opportunities in other countries as well. Net sales from APAC represented 21% of total sales in H1’19. During the last couple of years, the company’s combined revenue from APAC has been flat but the company has indicated that the revenue from APAC is likely to increase in the future as the strategy is to appeal to broader target audience globally. We expect APAC’s retail revenue in 2019E to increase by ~20% y/y and wholesale sales growth of ~13% y/y. In Q2, Marimekko updated its guidance for 2019, mainly as it expects higher licensing income in APAC during H2’19. The company reiterated its guidance for 2019E revenue and expects the revenue to be higher than in 2018 and expects operating profit to be higher than in 2018, approximately maximum of EUR 15m (previous: operating profit expected to be in the same level as in 2018). The company targets 10% y/y revenue growth and EBIT% of 15% in the long-term. We expect 2019E revenue of EUR 123m (prev. EUR 125m) and EBIT of EUR 15m (prev. EUR 14m), resulting in EBIT% of 11.9%.

We retain ”HOLD” with TP of EUR 30 (prev. EUR 26)

We have kept our underlying estimates largely intact but increased our 20E-21E estimates as we expect broader target audience and improved gross margin levels to support growth. We expect the company’s revenue to grow ~8% y/y in 20E-21E and EBIT growth of ~20% y/y. On our estimates, Marimekko trades at 19E-20E EV/EBITDA multiple of 9.7x and 8.6x which translates into ~50% premium compared to the premium goods peer group. We see Marimekko’s current valuation as stretched, but as we expect the company to transition towards new customer segments and markets, which should accelerate growth and enable the company to reach a new profitability level, we accept the premium. Our EBIT% estimates are already shifting towards the luxury goods peer group which also justifies higher multiples. We keep our rating “HOLD” with new TP of EUR 30 (prev. EUR 26).

Marimekko - Good EBIT growth in Q2

15.08.2019 | Earnings Flash

Marimekko’s Q2 revenue increased by 3% and was EUR 29.1m vs. EUR 31.1m/29.8m Evli/cons. Adj. EBIT was EUR 3.7m vs. EUR 3.5m/3.2m Evli/cons. Revenue was mainly driven by improved relative sales margin and sales growth. Marimekko reiterated its guidance for 2019E.

  • Finland: revenue was EUR 16.8m vs. EUR 16.7m Evli view. Revenue increased by 4%. Retail sales increased by 17%. Wholesale sales decreased by 18%.
  • International: revenue was EUR 12.4m vs. EUR 13.4m Evli view. Revenue increased by 2%. Retail sales decreased by 1% and wholesale sales increased by 6%.
  • Q2 operating profit was EUR 3.7m (12.7% margin) vs. EUR 3.5m/3.2m (11.3%/10.6% margin) Evli/cons.
  • Q2 EPS was EUR 0.32 vs. EUR 0.34/0.30 Evli/cons.
  • Guidance for 2019: net sales in 2019E are forecasted to be higher than in the previous year and adj. EBIT is expected to be higher than in the previous year, amounting at most to approx. EUR 15m.

Marimekko - Updated guidance for 2019E

23.07.2019 | Preview

Marimekko will report its Q2 result on August 15th and the company updated yesterday its guidance for FY19E. The company expects 2019E EBIT to be higher than in previous year, approximately maximum of EUR 15m. The company reiterated its guidance for revenue; revenue is expected to be higher than in previous year. We retain our rating “HOLD” with TP of EUR 26 (25) ahead of Q2.

Updated guidance ahead of Q2

Marimekko updated its 2019E guidance ahead of its Q2 result. The company reiterated its FY19E revenue guidance but updated its guidance for FY19E comparable operating profit. According to the new guidance for 2019E, revenue is expected to be higher than in previous year while operating profit is expected to be higher than in previous year at maximum of EUR 15m (previous: 2019E operating profit expected to be in the same level as in 2018). Marimekko did not provide much information other than that. Increased EBIT guidance for 2019E is mainly due to increased licensing income in APAC. The company also expects H2’19 costs to be higher than in H2’18.

Sales expected to increase in Q2

We expect Marimekko’s Q2 total sales to be EUR 31.1m (10.4% y/y) while we expect Q2’19E adj. EBIT of EUR 3.5m (2018 adj. EBIT of EUR 3.1m) resulting EBIT margin of 11.2% (2018 EBIT margin of 11.1 %). Marimekko’s business is cyclical and H2 and especially the outcome of Q4 holiday sales have a high impact on Marimekko’s total sales and profitability. The company also became aware of grey export in Asia in Q1’19 and the actions taken might have an impact on sales and earnings.

We retain “HOLD” with TP of EUR 26 (25)

We have updated our estimates after the guidance update. We have increased our FY19E revenue expectation to EUR 125m (previous EUR 118m) and adjusted our cost estimates to be in line with the new guidance. We expect 2019E adj. EBIT to be EUR 14.2m (previous estimate EUR 12.5m). We keep our rating “HOLD” with TP of EUR 26 (previously EUR 25).

Marimekko - Investing in growth in 2019E

17.05.2019 | Company update

Marimekko’s Q1 result hit all-time record and beat our estimates. Growth was mainly boosted by strong retail sales in Finland and wholesale sales in APAC. Even though adj. EBIT in 2019E is expected to remain flat, annual growth is likely to continue with good momentum. We upgrade our rating to “Hold” (“Sell”) and our TP to 25 (22).

Growth on the right track

Q1 revenue growth was 13% y/y and totaled EUR 27.1m. This was driven by wholesale sales growth in APAC and retail sales growth in Finland where LFL-growth was 12% y/y. As APAC wholesale sales was mainly impacted by deliveries that were transferred from Q4’18 to Q1’19, we expect wholesale sales to normalize during 2019E. In Finland, similar sized, non-recurring promotional deliveries as in 2018 (in Q2 and Q4 especially) are not expected to occur in 2019E. The company’s total sales are expected to grow from last year.

Investments in growth will increase 2019E expenses

Marimekko’s plan for 2019E is to invest in growth, which increases expenses. Major part of the investments will be used to revamp store network. Marketing expenses are expected to increase in 2019E as well as investments into IT and digitalization. These will weigh down adj. EBIT in 2019E but are likely to boost growth in the upcoming years. Marimekko has also become aware of grey exports in Asia, which could incur further costs.

Upgraded to “Hold” (“Sell”) with TP of 25 (22)

We have updated our estimates to take into account the IFRS 16 changes but kept the underlying 2019E figures mostly intact. We expect 2019E sales of EUR 118m (6% growth) and EBIT of EUR 13m (’18 EUR 12m). We have increased our growth expectations for ‘20E with sales growth of 7% y/y. On our estimates, Marimekko trades at EV/EBITDA 19E-20E multiple of 9.1x and 8.0x, which translate into 19% and 13% premium compared to the premium goods peer group. Investments in 2019E should support future growth but we are not ready yet to put emphasis on ‘20E-‘21E. We upgrade to “Hold” (“Sell”) with TP of 25 (22).

Marimekko - Q1 result beats our estimates

16.05.2019 | Earnings Flash

Marimekko’s Q1 revenue increased by 13% and was EUR 27.1m vs. EUR 25.3m Evli view. Adj. EBIT was EUR 2.6m vs. EUR 1.2m Evli view. Revenue was mainly driven by strong wholesale sales in APAC and increased retail sales in Finland. Operating result was boosted by increased sales and improved gross margin. Guidance for 2019E is kept intact.

  • Finland: revenue was EUR 12.8m vs. EUR 12.1m our expectation. Revenue grew by 7% y/y, split to 12% own retail and -1% wholesale. Own retail sales growth was driven by well performed regular-priced sales and the favorable trend in the domestic market. Wholesale was lower than last year as wholesale sales for the corresponding period included nonrecurring promotional deliveries, of which there were none this year.
  • International: revenue was EUR 14.3m vs. EUR 13.1m our view. Revenue increased by 18% y/y, mainly driven by wholesale sales in APAC region where the increase was 21%, as Q4’18 deliveries were transferred to Q1’19. Net sales increased also in all the other areas. In Japan, net sales grew by 18% of which retail sales growth was 13%.
  • Adj. EBIT was EUR 2.6m EUR vs. EUR 1.2m our view. Operating result was impacted by increased sales and improved gross margin. Net effect of IFRS 16 on operating result was +125 thousand. It is notable that our estimates do not reflect the IFRS 16 changes yet.
  • Guidance: Marimekko reiterated its guidance and expects 2019E revenue to increase from last year while adj. EBIT is expected to remain flat.

Marimekko - Downgraded to “Sell”

28.02.2019 | Company update

Marimekko’s soft international sales in Q4 were largely attributed to timing issues of wholesale deliveries . While growth appears to remain on the right track also in 2019E, flat adj. EBIT in 2019E is not enough to carry the recent clear increase in valuation multiples – “Sell” (”Buy”).

15% int. revenue drop largely attributed to timing issues

Marimekko’s international revenue declined by 15%, or by EUR 2.0m in Q4. This was driven primarily by APAC (-26%, EUR -1.4m) but also by EMEA (-11%, EUR -0.3m) and North America (-12%, EUR -0.3m). Management attributed to decline in APAC largely to a timing issue, as certain wholesale deliveries were postponed to Q1’19. The decline in EMEA and Norther America was also largely attributed to timing of wholesale deliveries.

Finland still strong and a bit better than we expected in Q4

Revenue in Finland grew by +12%, split to +8% own retail (own retail LFL +6%) and +22% wholesale. Wholesale was supported by non-recurring promotional deliveries, but retail revenue continued good growth, even though comps are tougher.

Adj. EBIT in 2019E weighted down by growth investments

Marimekko guides revenue to grow and adj. EBIT to remain flat in 2019E. Revenue will be flat in Finland, as non-recurring promotional deliveries will not reach the level of 2018. Revenue in APAC is expected to grow, supported by start of online sales in China and new stores. Despite revenue growth adj. EBIT will remain flat, as marketing and other growth spend is increased to spur growth in 2019E and beyond. CAPEX will also increase with store refurbishments, IT and HQ premise improvements.

Downgraded to “Sell” (“Buy”), ex-div TP intact at EUR 22

We have slightly cut estimates for 2019E. On our estimates Marimekko now trades at a clear premium to the peer group. While growth appears to remain on the right track also in 2019E, flat adj. EBIT in 2019E is not enough to carry the recent clear increase in valuation multiples, in our view. We downgrade to “Sell” (“Buy”) and keep our ex-div TP at EUR 22.

Marimekko - Weak international sales

27.02.2019 | Earnings Flash

Marimekko’s Q4 revenue was EUR 29.7m vs. EUR 31.6m/31.1m Evli/cons expectations, while adj. EBITDA landed at EUR 2.2m vs. EUR 2.3/2.6m Evli/cons views. International sales surprisingly declined by as much as 15% in Q4, explained in part by a timing issue of deliveries in APAC. However, international revenue declined somewhat in others markets as well. Dividend is in line. Guidance is mostly as expected, although the flat adj. EBIT guidance looks somewhat cautious vs. our estimates: we have expected adj. EBIT of EUR 13.1m in 2019E vs. EUR 12.2m in 2018A. Consensus for 2019E has been EUR 12.4m.

  • Finland: revenue was EUR 18.3m vs. EUR 17.6m our expectation. Revenue grew by +12% y/y, split to +8% own retail (own retail LFL +6%) and +22% wholesale.
  • International: revenue was EUR 11.4m vs. EUR 14.0m our view. Int. revenue decreased by 15% y/y, driven primarily by APAC (-26%), but also EMEA (-11%) and North America (-12%). Sales in APAC were weakened by a timing issue related to deliveries.
  • Adj. EBITDA was EUR 2.2m vs. EUR 2.3m/2.6m Evli/cons.
  • 2018 dividend: EUR 1.85 per share, consisting of EUR 0.60 ordinary and 1.25 extra. Dividend is in line.
  • 2019E guidance: revenue will increase, while adj. EBIT will be flat in 2019E. We have expected adj. EBIT of EUR 13.1m in 2019E vs. EUR 12.2m in 2018A. Consensus for 2019E has been EUR 12.4m.

Marimekko - Maintaining “Buy”

05.11.2018 | Company update

Marimekko had a strong Q3 and the company is now on an improved growth trajectory, following own actions that are now bearing fruit. We consider Marimekko’s outlook as being positive and retain “Buy” rating for the shares.

Guidance gives room for only EUR 1.4m EBIT in Q4

Marimekko had a very strong Q3. Performance remained solid in most markets. Despite strong Q3 guidance of max EUR 12m adj. EBIT in 2018E was kept intact. EUR 10.6m has been reached after Q3, implying guidance gives room for only EUR 1.4m for Q4. Earnings in Q4 are to be weakened by a revenue timing issue (part of revenue was timed from Q4 into Q3) and higher costs.

Shares could reach EUR 30 level if EBIT margin meets 15%

Marimekko revised its financial targets. Most notable change is in EBIT margin target, which is now 15% vs. 10% earlier. The 10% will be reached in 2018E. If 15% was reached, our DCF model and multiple exercises imply shares could reach EUR ~30 level, even without assuming higher growth than currently.

Extra dividend of EUR 1.25 to be distributed

Marimekko board proposes to distribute an extra dividend of EUR 1.25 per share, which is EUR ~10m. This corresponds to the divestment proceeds of the Herttoniemi real estate. Net cash was EUR 17m at the end of Q3. The remaining EUR 7m is reserved for general business development needs.

Maintaining “Buy” with an ex-div TP of EUR 22 (18)

We have raised FY19-20E estimates and expect a dividend of EUR 1.85 (0.60 ordinary + 1.25 extra) to be distributed for FY18E. We continue to see Marimekko’s outlook to be positive and valuation attractive. Our TP of EUR 22 (18) values the shares at 12.7x EV/EBIT with our 2019E estimates, or at 11% premium to the peer group, justified by a clear turn in sales and further margin upside upon continued growth.

Marimekko - Very strong Q3; distributes extra dividend; revises financial targets

01.11.2018 | Earnings Flash

Marimekko’s Q3 headline numbers are very strong for both revenue and profits. The company keeps 2018E guidance intact, but the max EUR 12m limit for adj. EBIT gives room for only EUR 1.4m adj. EBIT in Q4, which would be weaker than what has been reached during the last two years. Extra dividend of EUR 1.25 is proposed, and financial targets are revised.

  • Finland: revenue was EUR 17.2m vs. EUR 16.2m our expectation. Revenue grew by +14% y/y, split to +11% own retail (own retail LFL +9%) and +24% wholesale. Strong retail sales growth was implied by the guidance upgrade in Sep 2018. Wholesale growth of 24% was primarily due to non-recurring promotional deliveries.
  • International: revenue was EUR 12.7m vs. EUR 12.3m our view. Revenue increased by +4% y/y, driven primarily by growth in EMEA (+20%). Growth in APAC excl. royalties was also strong at 14%.
  • Adj. EBITDA was EUR 6.9m (margin 23.2%) vs. EUR 4.5m our view and EUR 5.2m consensus. The beat is driven primarily by stronger than expected revenue, good trend in retail sales in Finland and growth in regular-priced sales.
  • Extra dividend: Board proposes of EUR 1.25 per share.
  • New financial targets: EBIT margin 15% (prev: 10%), net debt/EBITDA max 2.0x (new), annual sales growth over 10% (intact), dividend at least 50% of EPS (intact).
  • 2018 guidance intact: revenue and adj. EBIT will increase y/y. Adj. EBIT will be max EUR 12m. Marimekko expects revenue to grow in Finland and in APAC. License revenues are expected to remain flat in 2018E. Marketing costs will increase.

Marimekko - Q3/19 with CEO Tiina Alahuhta-Kasko

06.11.2019

Marimekko - Company presentation

20.08.2019
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Company Facts

Guidance

2023 revenue is expected to be higher than in the previous year. Adj. EBIT margin is expected to be between 16-19%.

Financial targets

Annual growth in net sales 15 percent and operating profit margin (EBIT) of 20 percent. Ratio of net debt to EBITDA at year end maximum of 2. A yearly dividend, at least 50% of net result.

Share price (EUR)


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