Marimekko - Interim report (Q1 and Q3)

INTERIM REPORT OF MARIMEKKO CORPORATION, 1 January - 31 March 2017: Net sales and earnings improved in the first quarter of the year

Marimekko Corporation, Interim Report, 10 May 2017 at 8.30 a.m.

INTERIM REPORT OF MARIMEKKO CORPORATION, 1 January - 31 March 2017: Net sales
and earnings improved in the first quarter of the year 

This release is a summary of Marimekko’s Interim Report for the January-March
period of 2017. The complete report is attached to this release as a pdf file
and it is also available on the company’s website at company.marimekko.com
under Releases and publications. 

The first quarter in brief

  -- Net sales grew by 7 percent to EUR 22.5 million (Q1/2016: 20.9). Most of
     the growth is accounted for by the timing of a sales promotion in Finland.
  -- Operating result improved compared with the same period last year and was
     EUR 0.9 million (-1.1). The comparison period's operating result included a
     restructuring expense of EUR 0.8 million. Comparable operating result was
     EUR 1.1 million (-0.3).
  -- Operating result was boosted by growth in sales in Finland, an increase in
     relative sales margin and a lower cost level than in the comparison period.

Financial guidance for 2017 (unchanged)

The Marimekko Group's net sales and comparable operating profit for 2017 are
forecast to be at the same level as in the previous year. 

Key figures

(EUR million)                          1-3/2017  1-3/2016  Change, %  1-12/2016
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Net sales                                  22.5      20.9          7       99.6
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International sales                        10.7      10.8         -2       43.8
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% of net sales                               47        52                    44
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EBITDA                                      1.7       0.0                   9.4
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Comparable EBITDA                           2.0       0.8        142       10.2
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Operating result                            0.9      -1.1                   5.2
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Comparable operating result                 1.1      -0.3                   6.1
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Operating result margin, %                  3.9      -5.1                   5.3
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Comparable operating result margin, %       5.0      -1.2                   6.1
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Result for the period                       0.6      -1.0                   4.0
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Earnings per share, EUR                    0.07     -0.12                  0.50
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Cash flow from operating activities        -1.1      -4.0                   6.1
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Return on investment (ROI), %              20.0       4.4                  15.8
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Equity ratio,  %                           62.5      53.4                  58.5
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Gross investments                           0.3       0.2         36        2.7
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Personnel at the end of the period          414       439         -6        431
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outside Finland                              99       113        -12        111
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Brand sales*                               44.7      44.1          2      199.3
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outside Finland                            28.5      28.7         -1      124.1
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proportion of international sales, %         64        65                    62
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Number of stores                            160       155          3        159
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The change percentages in the table were calculated on exact figures before the
amounts were rounded to millions of euros. 

* Brand sales are given as an alternative non-IFRS key figure. Brand sales,
consisting of estimated sales of Marimekko products at consumer prices, are
calculated by adding together the company's own retail net sales and the
estimated retail value of Marimekko products sold by other retailers. The
estimate, based on Marimekko’s realised wholesale sales and royalty income, is
unofficial and does not include VAT. The key figure is not audited. The
calculation method for 2017 figures has been restated for the coefficients
used; to maintain comparability, the change also applies to the figures for
2016. 

Tiina Alahuhta-Kasko, President and CEO, in conjunction with the report:

“Our net sales and earnings for the first quarter of 2017 grew as expected.

“Net sales rose by 7 percent. The main reason for the growth was a change in
the timing of our annual sales promotion in Finland: this year the promotion
was timed for the turn of March and April whereas last year it was held
entirely during the second quarter. Sales in Finland grew by 17 percent. Our
operating result improved compared with the same period in the previous year.
This was influenced by growth in sales in Finland, an increase in relative
sales margin and action taken last year to boost profitability. It is worth
noting that, in our business sector, net sales are typically low on a seasonal
basis during the first quarter relative to operating costs. 

“I am pleased that the overall state of the retail market in Finland is at last
showing signs of improvement and that trade has gone into an upswing after
several weaker years. However, the trend is forecast to be modest. On the other
hand, uncertainty in the global economy does not appear to be letting up this
year either, partly due to the unpredictable political situation. It can also
be seen that consumers in all markets are more price-conscious than before and,
especially in Finland, price sensitivity in consumers' purchasing behaviour has
increased during the past few years. 

“This year we are continuing our long-term development work related to the
revamp of our collections and our brand. To seek markedly stronger growth in
the future, we have set out to enhance the commercial viability of our
collections, building on Marimekko’s original, positive and colourful design
philosophy. In the early months of the year, we have focused on delineating the
frameworks of our product range strategy especially for the ready-to-wear line.
I am confident that we are on the right track and that the work we are doing
will improve our opportunities to respond to the needs of our international
customer base even better than before. 

“Digitisation has for years been one of the most important phenomena
transforming our sector. We see it as a great opportunity to our
internationalising Marimekko for boosting both our products' availability and
our brand profile. We expect our own webstore and other online sales channels
to continue to grow. In January, we extended our e-commerce to 16 new
countries; today it operates in 29 countries. The development of online
business and multi-channel distribution plays a very important role for us this
year as well. 

“We will unwaveringly continue the long-term development of the company by
which we seek profitable growth and enhanced competitiveness.” 

Market outlook and growth targets for 2017

The general uncertainty in the global economy is forecast to continue, and the
estimated consumer demand varies in Marimekko's market areas. Retailers are
exercising caution in their additional purchases and in selecting new
suppliers, which is expected to impact Marimekko's wholesale sales also in
2017. 

Finland, Marimekko’s important domestic market, accounts for about half of the
company’s net sales. There are signs of a more positive vibe for retailing, and
the trend is forecast to be moderate. Nonrecurring promotional deliveries had a
positive impact on the company's sales in 2016, but no similarly large
deliveries are in sight for 2017. Marimekko's sales in Finland, excluding
income from nonrecurring promotional deliveries, are expected to be roughly on
a par with the previous year. 

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 be roughly on a par with the previous year. Most of the Marimekko
stores and shop-in-shops to be opened in 2017 will be in the Asia-Pacific
region, and the company sees growing demand for its products in this area
especially in the longer term. In Australia, prospects are expected to continue
to be positive. 

In 2017, the main thrust in expansion will continue to be on openings of
retailer-owned Marimekko stores. The aim is to open around 10-20 new Marimekko
stores and shop-in-shops. The majority of the new stores will be shop-in-shops.
Furthermore, the company will continue the enhancement of the operations of
Marimekko stores opened in recent years. The company’s own e-commerce and other
online sales channels are forecast to continue to grow. 

Royalty income from North America is expected to increase slightly due to a
licensing agreement concluded with a North American company. 

The expenses of marketing operations in 2017 are forecast to be higher than in
2016 (EUR 4.4 million). The total investments are estimated at approximately
EUR 2 million (2.7). 

Further information:

Tiina Alahuhta-Kasko, President and CEO, tel. +358 9 758 71
Elina Aalto, CFO, tel. +358 9 758 7261

MARIMEKKO CORPORATION
Corporate Communications

Piia Kumpulainen
Tel. +358 9 758 7293
piia.kumpulainen@marimekko.com

DISTRIBUTION:
Nasdaq Helsinki Ltd
Key media

Marimekko is a Finnish design company renowned for its original prints and
colours. The company’s product portfolio includes high-quality clothing, bags
and accessories as well as home décor items ranging from textiles to tableware.
When Marimekko was founded in 1951, its unparalleled printed fabrics gave it a
strong and unique identity. Marimekko products are sold in about 40 countries.
In 2016, brand sales of the products worldwide amounted to EUR 199 million and
the company's net sales were close to EUR 100 million. Roughly 160 Marimekko
stores serve customers around the globe. The key markets are Northern Europe,
North America and the Asia-Pacific region. The Group employs about 400 people.
The company’s share is quoted on Nasdaq Helsinki Ltd. www.marimekko.com

Attachments:

Marimekko Interim Report January-March 2017.pdf