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Marimekko - CMD notes

Marimekko’s CMD offered more insights into the company’s SCALE strategy for 2023-2027 and its progress to date. The long-term financial targets remain unchanged. 

Scaling continues, with APAC as the growth generator

Marimekko’s long-term annual net sales growth target remains unchanged at 15%. In Finland, its most established market, the company aims to boost its market share further. Additionally, growth is targeted in its smaller Western markets in Scandinavia, EMEA and North America. In APAC, the company continues to grow through the proven loose franchise model. While Marimekko showed new potential markets in APAC (Philippines, Indonesia, Cambodia, India, United Arab Emirates), we understood that the short to mid-term focus remains on scaling the current markets. In terms of profitability, Marimekko aims for a long-term comparable EBIT margin of 20%. The most important factor for margin improvement is the sales growth given the company’s substantial operational leverage. While Marimekko aims to improve profitability, it will continue to make OPEX investments, for example into marketing and sustainability.

 

Our estimates remain below the long-term targets

We keep our estimates for Marimekko unchanged, for 2024E, we expect net sales at EUR 180.1m and adj. EBIT at EUR 31.8m with a margin of 17.7%. Going forward, we estimate that the Finnish market will rebound in 2025E slightly while international growth continues driven by APAC. Our estimates for the coming years remain below the company’s long-term targets. For 2025-2027E, we project robust double-digit growth in the APAC region and anticipate domestic net sales to increase at a mid-single-digit rate. We forecast that profitability will enhance, with the EBIT margin increasing to 19.5% by 2027E, bolstered by the company's operational leverage. We believe that to meet the long-term targets, the APAC region needs to accelerate growth further since we expect that increasing domestic sales beyond our projections will be challenging.

 

HOLD with a TP of EUR 13.0

We continue to find the current valuation relatively neutral. The company trades at 15-13x adj. EV/EBIT and 20-17x P/E, in line with our peer group (aggregate of premium and luxury peers).

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