Marimekko - Some uncertainty ahead
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 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).