Marimekko - Back on a growth track
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 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.