Half-year Financial Report, 9 August 2018
Market outlook and growth targets in 2018
Uncertainty in the global economy is forecast to continue, partly because of the unpredictability of the political situation. 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. Growth in retail trade is forecast to be at a fairly good level. Sales in 2018 are positively impacted by nonrecurring promotional deliveries; about half of the deliveries took place in the second quarter and the remainder is fairly evenly distributed over the other quarters of the year. In 2017 there were no similarly large deliveries. Marimekko’s sales in Finland are expected to grow in 2018.
The Asia-Pacific region, Marimekko’s second-biggest market, 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 markets are in fairly early stages. Japan already has a very comprehensive network of Marimekko stores, and new ones are being opened at a rate of a few stores per year. Sales are supported by enhancing the operations of stores and by optimising the product range. Sales in the Asia-Pacific region this year are forecast to grow. The company sees increasing demand for its products in this area especially in the longer term.
In 2018, the main thrust in expansion remains on openings of retailer-owned Marimekko stores, and continuing growth is expected in the company’s own e-commerce and other online sales channels. The aim is to open around 10–15 new Marimekko stores and shop-in-shops. The company will continue the enhancement of the operations of Marimekko stores opened in recent years.
Royalty income is forecast to be roughly on a par with the previous year.
The expenses of marketing operations in 2018 are forecast to be higher than in 2017 (EUR 4.5 million). The total investments are estimated to grow relative to the previous year (EUR 1.2 million).
Due to the seasonal nature of Marimekko’s business, the major portion of the company’s net sales and earnings are traditionally generated during the last two quarters of the year. In 2018, net sales and earnings for the second quarter were to some extent boosted by timing-related factors. Sales growth in Finland was partly attributable to a change in the timing of the annual spring sales promotion, in addition to nonrecurring promotional deliveries, and part of the growth in wholesale sales in the Asia-Pacific region was due to deliveries for the third quarter being transferred to the preceding quarter. The share of holiday sales in particular of the company’s net sales for the last quarter is considerable and the outcome of the holiday season has a significant impact on results for the whole year.
Financial guidance for 2018 (updated on 21 September 2018)
Marimekko revises its earlier estimate of comparable operating profit for 2018 and removes the reference to the level of the previous year, due mainly to a better-than-expected trend in retail sales in Finland in August. According to the new estimate, comparable operating profit for 2018 is expected to be higher than in the previous year, amounting at the most to approximately EUR 12 million.
The net sales estimate given in the half-year financial report remains unchanged. The revised estimate in full is as follows: the Marimekko Group’s net sales for 2018 are forecast to be higher than in the previous year; comparable operating profit for 2018 is expected to be higher than in the previous year, amounting at the most to approximately EUR 12 million (2017: 8.6).
In its half-year financial report published on 9 August 2018, Marimekko Corporation estimated that the Group’s net sales for 2018 would be higher than in the previous year and that comparable operating profit would be at the same level as or higher than in the previous year.