Marimekko - Facing tough comparison figures
Marimekko reports its Q1/25 results on 14th of May. We expect relatively flat sales, and a weaker profitability compared to the strong Q1/24 that was supported by timing of both wholesale deliveries and licensing income.
Uncertainty has increased
The escalation of trade war after the first quarter has casted a shadow over global growth. In 2024, 6% of Marimekko’s net sales came from the North American market, therefore we expect direct effects of the tariffs imposed rather limited for the company. While the direct effects are somewhat limited, the escalation of trade war affects consumer confidence and demand for discretionary products. Over half of Marimekko’s revenue comes from the domestic market. The consensus estimates for GDP growth in Finland have decreased from the levels seen late last year. In April, the IMF reduced its projection for Finland's real GDP growth in 2025 to 1%, while it forecasted growth of 2% in October 2024. ETLA Economic Research has lowered its forecasts for Finnish private consumption of durable and semi-durable goods, as the savings rate continues to rise amid ongoing uncertainty.
Facing a challenging comparison period in Q1
Marimekko’s Q1 last year was helped by timing of non-recurring promotional wholesale deliveries in Finland. For 2025, the company guides that the non-recurring deliveries are expected to be significantly lower compared to 2024 and weighted clearly in the second half of the year. In addition, the company expects licensing income to be significantly below the levels of 2024. In Q1/24, the company had licensing income of EUR 1.4m, near record level, while we expect licensing income of EUR 0.5m for Q1/25. Overall, we model near flat sales y/y for Q1 at EUR 37.4m (EUR 37.7m Q1/2024). We expect continued growth in retail and wholesale in APAC while lower expected licensing income in the area has negative effect on the overall growth rate. With lower licensing income and sales growth, we estimate gross margin to fall from the comparison period. We estimate adj. EBIT of EUR 4.0 (Q1/24: EUR 5.2m) with margin of 10.8% (13.8%) for Q1/25. We have made only slight adjustments to our estimates for the FY as we model net sales of EUR 191m and EBIT of EUR 33.9m with a margin of 17.7%.
ACCUMULATE (prev. REDUCE), with a TP of EUR 13.0 (14.0)
Marimekko is priced at 14-13x EV/EBIT and 19-17x P/E multiples based on our estimates for 2025-2026. The valuation is relatively modest on both relative and absolute terms. We adjust our target price to EUR 13.0 (prev. EUR 14.0), primarily driven by lower peer group multiples. After a share price decline of over 15% since our latest update, we revise rating to ACCUMULATE (prev. REDUCE).