From the President & CEO

Interim Report, 1 November 2018

“The third quarter was exceptionally strong, as expected. Our net sales grew by 10 percent and our comparable operating profit by 44 percent. We can be very pleased with our recent progress, and this is a good basis for continuing our long-term work by which we seek markedly stronger growth than before. Earlier today, we announced decisions made by Marimekko’s Board of Directors regarding acceleration of profitable growth and improvement of capital efficiency.

“In the July-September period of 2018, our net sales rose to EUR 29.8 million (27.2). Growth in retail and wholesale sales in Finland plus a favourable trend in wholesale sales in the Asia-Pacific region were key factors behind the strong quarter, as was the case also in the second quarter. In Finland, our retail sales growth once again outpaced the overall trend in the sector; wholesale sales grew primarily due to nonrecurring promotional deliveries. Our comparable operating profit was EUR 6.3 million (4.4).

“In the January-September period, our net sales grew by 13 percent and growth was seen in all market areas. Our operating profit rose to EUR 16.5 million (6.0) with the capital gain from the sale of our head office in the second quarter. Our comparable operating profit was EUR 10.6 million (6.2). Our recent favourable trend has certainly been contributed to by a general recovery in Finnish retail trade, but I believe that the greatest impact has been from the effectiveness of the new direction in our collections and our brand.

“On 21 September 2018, we revised our estimate of full-year comparable operating profit. At the same juncture, we estimated that this year most of our earnings will, contrary to the normal situation, be generated during the second and third quarters. According to our estimate, more costs than in 2017 will occur in the fourth quarter. We also reported that, during the second half of the year, a somewhat larger part of wholesale sales will be generated in the third quarter.

“We have earlier today announced that Marimekko’s Board of Directors has now completed its evaluation regarding the use of the funds obtained from the sale of our head office. Through the planned actions, we seek to accelerate profitable growth and to improve capital efficiency. The Board of Directors has decided that part of the funds will be used for the development of strategically important business areas. In addition, the Board has decided to propose to the Annual General Meeting to be held in spring 2019 the payment of an additional dividend as well as to revise our long-term financial goals. Today we also announced that we will arrange a share issue directed to our personnel in Finland – the Board will decide on the detailed terms and conditions as well as schedule of the share issue in early 2019.

“One of the main events of the period under review was the reopening at the end of August of the Marimekko flagship store in the popular Omotesando district of Tokyo after a total makeover. Our Sydney flagship store is currently undergoing a revamp, and it will open in a new location around mid-November. Earlier this year we also revamped our flagship store in Stockholm. These investments in the store network are important as the flagship stores play a central role as the embodiment of our brand in the world. In China, we will enhance our investment in marketing and in raising our brand profile. Our aim is to start online selling of Marimekko products so that we can, together with our local partner, offer our customers an omnichannel experience in this market as well. Also, we must not forget the year’s most important season, holiday sales, the success of which in our sector typically has a vital impact on the full-year results.”

Tiina Alahuhta-Kasko