Marimekko |

A Finnish design house aiming to grow globally

| Finland

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Financial overview

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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 Q319 interview with Tiina Alahuhta-Kasko

Marimekko - Q3/19 with CEO Tiina Alahuhta-Kasko

06.11.2019
Marimekko Company presentation

Marimekko - Company presentation

20.08.2019
ShareholdersDate% of shares% of votes
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Marimekko Company presentation

Video presentation

Company Facts

Guidance

20E net sales lower compared to last year and adj. EBIT approx. at the same level or lower than last year.

Financial targets

Annual growth in net sales over 10 percent and operating profit margin of 15 percent. Ratio of net debt to EBITDA at year end maximum of 2.

Share price (EUR)


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