From the President & CEO

Interim Report, 2 November 2017

"Results for the third quarter were strong.

"In the July-September period, our net sales grew by 1 percent and our operating profit grew to EUR 4.4 million (3.7). The earnings were boosted by increased royalties resulting from a new licensing agreement in the Asia-Pacific region, by a positive trend in retail sales, particularly in Finland, and by a rise in relative sales margin. Key factors in the improvement in sales margin were a positive trend in our retail sales in general as well as growth in regular-priced sales. Our results were weakened by a downturn in Finnish wholesale sales, which was due to the fact that the comparison period's wholesale sales included nonrecurring promotional deliveries, and none took place this year.

"In the January-September period of 2017, our net sales also grew by 1 percent; our operating profit grew on the comparison period to EUR 6.0 million (3.5), and our comparable operating profit was EUR 6.2 million (4.3). On 27 October 2017, we revised our estimate of comparable operating profit for 2017 due to better-than-expected relative sales margin and trend in our retail sales as well as increased royalties. Our comparable operating profit for 2017 is expected to be at the same level as or higher than in the previous year.

"On the whole, I think we can be pleased with the third quarter. We succeeded in continuing the improvement in relative sales margin which got underway in the second quarter. Cash flow from operating activities also strengthened. This provides a good basis for proceeding with improvements.

"During the autumn, we have continued our efforts to underpin the international profile of our brand and to reinforce our competitiveness. In mid-September, in collaboration with Slush (Europe's leading event for technology and start-ups) and Junction (the largest hackathon in Europe), we held the Marimekko Designathon competition in honour of Finland's centenary year. In the competition, we invited younger-generation talents to challenge the traditional conventions of the textile and clothing industry and to develop fresh, customer-centred solutions with the help of virtual reality and augmented reality technologies. It is important for us to invest in the opportunities offered by digitisation.

"At the beginning of October, we showcased our spring/summer 2018 ready-to-wear collection at Paris Fashion Week, which is globally one of the biggest events in our sector. The presentation was held at the Palais de Tokyo museum of modern art, and its creative concept was built on our tradition of pattern design and fabric printing based at our Helsinki headquarters, which attracted the attention of the fashion world's authenticity-appreciating media and influencers. We were also happy that our bold prints and colours were shown in Paris in Junya Watanabe’s spring/summer 2018 collection for Comme des Garçons.

"In the remaining months of the year, we are continuing the long-term work by which we strive to underpin our competitiveness and to seek markedly stronger growth and profitability. As we have reported, delineating our product range and pricing strategies as well as enhancing the efficiency of our procurement chain play a strong part in this work. As is typical in our line of business, the share of holiday sales in particular of sales for the last quarter is considerable, and the outcome of the holiday season has a significant impact on results for the whole year. During the rest of the year, we will focus on ensuring successful holiday sales."