From the President & CEO

Financial Statements Bulletin, 9 February 2017

"I feel that we can be pleased that we attained our targeted improvement in profitability and efficiency in 2016. Our trend in profits in the final quarter and all in all for the second half of the year was very good in comparison with the previous year. The trend was supported by the reorganisation carried out in the first half of the year. Our net sales for the whole year grew by 4 percent; our operating profit improved to EUR 5.2 million, and our comparable operating profit was EUR 6.1 million (1.5). There are signs of recovery in the overall state of the retail market, but the uncertainty over the global economy that has overshadowed our sector for years does not look like easing up this year either. Due to the long-standing uncertainty, price sensitivity has increased in consumer purchasing behaviour in recent years, particularly in Finland, and this has resulted in growth in discount-driven sales.

"In 2016, we continued our moderate international expansion with the main thrust on openings of retailer-owned Marimekko stores. Of the 14 new stores opened during the year, 11 are located in the important Asia-Pacific region. In Australia, we opened our fifth company-owned store in November. This year, our goal is to open around 10-20 new Marimekko stores; the main thrust in openings is on shop-in-shops. Thus we aim to expand our distribution and raise our profile in other wholesale channels as well.

"We have continued our investment in developing our digital business. In 2016, we opened our own online store in Australia and now, at the end of January, we announced that we have improved the availability of our products in Europe by extending our e-commerce to 16 new countries. At the moment, our online store reaches customers in 29 countries.

"For Marimekko, 2016 was not only a year of boosting profitability but also a year of building. The revamp of our collections and our brand progressed, and this long-term development work still continues. The revamped collections have now been on the market for their first whole year, and the feedback we receive enables us to further enhance our collections' commercial prospects. In 2017, we are continuing to optimise our product range and to improve our procurement efficiency. We will also review our global pricing strategy, and one of the moves we make will be to increase the proportion of slightly more affordable products in our collections in response to price-sensitive market conditions.

"To sum up, we succeeded in restoring our profitability to a good level in 2016 after the weaker interim year of 2015. This puts us in a good place to continue our long-term work towards profitable growth and reinforced competitiveness."