From the President & CEO

Financial Statements Bulletin, 27 February 2019

“The year 2018 was strong for Marimekko. Our long-term work to build international success continues.

“Our net sales grew by 9 percent and our comparable operating profit by 42 percent. The growth figures for the comparison year were also good, so the past year was a strong demonstration of the effectiveness of the new direction in our collections and our brand. However, we are just starting out on our strategy period extending to 2022, and much work needs to be done as we seek markedly stronger growth and profitability.

“As we forecasted previously, most of our earnings for 2018 were generated during the second and third quarters, which was contrary to the normal situation. The last quarter’s net sales were on a par with the previous year, and the period’s most important season, holiday sales, performed well. In the Asia-Pacific region, part of the period’s wholesale deliveries took place after the start of 2019. This change in the delivery pattern and the fact that a substantial portion of our fixed costs occurred in the final quarter were the main reasons why our comparable operating profit fell short of the same period last year. In the October-December period of 2018, our net sales were EUR 29.7 million (29.8) and our comparable operating profit was EUR 1.6 million (2.4).

“Our net sales for the full year 2018 rose to EUR 111.9 million (102.3) and our operating profit to EUR 17.7 million (8.4) with the capital gain from the sale of our head office in the second quarter. Our comparable operating profit was EUR 12.2 million (8.6). Growth in retail and wholesale sales in Finland as well as increased wholesale sales in the Asia-Pacific region were among the main factors behind the strong result. Growth in wholesale sales in Finland was generated mainly by nonrecurring promotional deliveries. It was also gratifying that our relative sales margin was at a favourable level and regular-priced sales performed well.

“All in all, it was a very eventful year. In our sector, boosting international brand recognition is one of the main prerequisites for success. The limited-edition collaboration collections launched in the early months of the year with the Japanese clothing brand Uniqlo and the cosmetics brand Clinique gave us a lot of international visibility alongside our own marketing actions. We also invested in our store network: the Marimekko flagship stores in Stockholm, Tokyo and Sydney were revamped during the year. The flagship stores play a central role as the most prominent embodiment of our brand in the world.

“In November, we announced that part of the funds obtained from the sale of our head office in the spring would be used for development of strategically important business areas. By this we aim to accelerate growth. In the same connection, we also revised our long-term financial goals.

“Towards the end of the year, we devoted greater efforts to marketing and boosting our brand recognition in China. This year, we have taken the first steps to launch online sales of Marimekko products in WeChat and Tmall. Our aim is to so improve the availability of our products and, together with our local partner, to offer an omnichannel experience to our customers in this market, which is strategically important to us. Our partner is responsible for the operation of the Marimekko stores in China and we ourselves are responsible for online sales. Since online sales are still very much in the early stages, it will incur expenses for us this year. I am convinced that we will gain valuable lessons in the future of digital business, as China is one of the world’s most advanced and rapidly developing online marketplaces.

“Personnel are a key asset in building our success and in carrying out our international growth strategy. We reported earlier today that Marimekko’s Board of Directors has decided on the terms and conditions as well as schedule of the personnel share issue we are going to arrange in Finland. I think that now, in the early stages of our new strategy period, is a logical time for the personnel share issue. I am pleased with the opportunity this offers Marimekko employees to increase their holdings or to become new owners of our company, thus taking part in building our common future also in the role of shareholders.

“In 2019, we will invest considerably more in growth than in the past year. We will revamp our store network and improve IT systems to underpin our digital business. The new owner of our head office has started renovating the building and enhancing its energy efficiency. We will also modernise our work spaces to increase employee well-being. Another reason for the renovation is to provide visitors to our building with a more impressive experience and to attract new customers. The Marimekko house accommodates our company’s head office, design functions and textile printing factory as well as two retail stores and a restaurant under one roof. The building already attracts over 100,000 visitors per year.”

Tiina Alahuhta-Kasko