Financial guidance for 2019 (revised on 14 October 2019)
The Marimekko Group’s net sales for 2019 are forecast to be higher than in the previous year and comparable operating profit is also expected to be higher than in the previous year, amounting to approximately EUR 17 million.
Market outlook and growth targets in 2019 (interim report of 6 November 2019)
Uncertainty in the global economy is forecast to continue, partly because of the unpredictability of the political situation. The trade war between China and the United States and the unstable situation in Hong Kong, for example, have an impact on consumers’ purchasing behaviour. Consumer demand forecasts vary among Marimekko’s different market areas.
Finland, Marimekko’s important domestic market, represents about half of the company’s net sales. Sales in Finland are expected to grow on the previous year. Domestic wholesale sales in 2018 were boosted by nonrecurring promotional deliveries. In 2019, the total value of promotional deliveries will be substantially lower than last year, and the major deliveries will occur in the final quarter of the year.
The Asia-Pacific region is Marimekko’s second-largest market and it plays a significant part in the company’s internationalisation. Japan is clearly the most important country in this region to Marimekko. The other countries’ combined share of the company’s net sales is still relatively small, as operations in these countries are at an early stage compared with Japan. Japan already has a very comprehensive network of Marimekko stores. Sales growth is supported by developing the operations of existing stores, optimising the product range and increasing online sales. This year, net sales in the Asia-Pacific region are forecast to grow. The company sees increasing demand for its products in this area especially in the longer term.
Marimekko has become aware of cases of grey exports and has taken due action. The control of the cases has a weakening impact on the company’s sales and earnings.
The key drivers of the company’s growth are its own e-commerce and other online sales channels, partner-led retail in Asia, and increasing the sales per square metre of existing stores in Finland and the international markets. The main thrust in new openings is on retailer-owned Marimekko stores and other wholesale channels. The aim is to open approximately 5 new Marimekko stores and shop-in-shops in 2019.
Licensing income in 2019 is estimated to be markedly higher than in the previous year.
More costs than in 2018 are expected to occur in the remainder of the year. The expenses of marketing operations for the full year 2019 are forecast to be higher than in 2018 (EUR 6.3 million*). Total investments are estimated to grow significantly relative to the previous year (EUR 1.3 million). Most of the investments will be used to revamp the company’s headquarter premises and the store network as well as to improve IT systems to underpin digital business. The estimated effects of the long-term bonus system targeted at the company’s Management Group are also expected to exert a drag on the company’s results. The effects will depend on the trend in the price of the company’s share during the year.
Due to the seasonal nature of Marimekko’s business, the major portion of the company’s net sales and earnings have historically been generated during the last two quarters of the year. In 2018, contrary to the historical trend, most of the company’s earnings were generated during the second and third quarters, which according to Marimekko’s revised outlook is expected to be the case in 2019 as well. In the final quarter of the year, holiday sales make up a significant share of net sales.
* The classification method for marketing expenses has changed in 2019; to maintain comparability, the figures for 2018 have been restated accordingly.