INTERIM REPORT OF MARIMEKKO CORPORATION, 1 January–30 September 2020:
This release is a summary of Marimekko’s interim report for the January-September period of 2020. 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 & publications.
The third quarter in brief
- The coronavirus pandemic continues to heavily impact the fashion industry and specialty retail sector all over the world. Despite the challenging situation, Marimekko’s net sales rose by 10 percent to
EUR 38.0 million (Q3/2019: 34.5). - Net sales were boosted especially by a favorable trend in wholesale sales in
Finland and EMEA. The increase in Finnish wholesale sales was partly due to nonrecurring promotional deliveries. Marimekko’s retail sales declined moderately considering the circumstances, as online sales continued to perform well and retail sales inFinland remained on a par with the comparison period. Also, retail sales include about a million euros in sales which were left unrecognized as revenue in the second quarter due to logistic challenges posed by the pandemic situation. - Operating profit grew to
EUR 10.5 million (7.8), and comparable operating profit was alsoEUR 10.5 million (7.8). - Earnings were boosted by a noticeable decrease in fixed costs due to adjusted operations as well as by increased net sales. Fixed costs were also reduced by subsidies granted in various countries to mitigate the negative business impacts of the coronavirus pandemic. A decline in relative sales margin, which was largely due to higher logistics costs resulting from an increase in online sales, had a weakening impact on results.
January-September in brief
- Due to the impacts of the coronavirus pandemic, net sales fell by 5 percent to
EUR 86.2 million (1–9/2019: 90.7). Net sales were weakened especially by a decline in retail sales inFinland andNorth America as well as a decrease in wholesale sales in theAsia-Pacific region . Some of the decline in net sales was offset by booming online sales as well as a strong trend in Finnish wholesale sales, which was partly due to nonrecurring promotional deliveries. - Operating profit rose to
EUR 14.4 million (14.1), and comparable operating profit was alsoEUR 14.4 million (14.1). Earnings were boosted by a noticeable decrease in fixed costs as a result of Marimekko’s prompt adjustment measures. A decline in relative sales margin, which was mainly due to higher logistics costs resulting from an increase in online sales, as well as reduced net sales had a weakening impact on results.
Financial guidance for 2020 (as revised on
In its half-year financial report on
Risks and uncertainties related to the coronavirus pandemic are described in the Major risks and factors of uncertainty section of this interim report.
Key figures
(EUR million) | 7–9/ 2020 | 7–9/ 2019 | Change, % | 1–9/ 2020 | 1–9/ 2019 | Change, % | 1–12/ 2019 |
Net sales | 38.0 | 34.5 | 10 | 86.2 | 90.7 | -5 | 125.4 |
International sales | 15.0 | 14.8 | 2 | 38.3 | 41.5 | -8 | 54.3 |
% of net sales | 40 | 43 | 44 | 46 | 43 | ||
EBITDA | 13.6 | 11.0 | 24 | 23.8 | 23.5 | 1 | 29.7 |
Comparable EBITDA | 13.6 | 11.0 | 24 | 23.8 | 23.5 | 1 | 29.7 |
Operating profit | 10.5 | 7.8 | 34 | 14.4 | 14.1 | 2 | 17.1 |
Comparable operating profit | 10.5 | 7.8 | 34 | 14.4 | 14.1 | 2 | 17.1 |
Operating profit margin, % | 27.7 | 22.7 | 16.7 | 15.5 | 13.6 | ||
Comparable operating profit margin, % | 27.7 | 22.7 | 16.7 | 15.5 | 13.6 | ||
Result for the period | 8.0 | 6.4 | 25 | 10.3 | 10.9 | -5 | 13.0 |
Earnings per share, EUR | 0.98 | 0.79 | 25 | 1.27 | 1.34 | -6 | 1.61 |
Comparable earnings per share, EUR | 0.98 | 0.79 | 25 | 1.27 | 1.34 | -6 | 1.61 |
Cash flow from operating activities | 12.6 | 10.9 | 15 | 12.2 | 21.2 | -42 | 29.0 |
Return on investment (ROI), % | 20.7 | 17.3 | 17.9 | ||||
Equity ratio, % | 44.6 | 39.8 | 40.2 | ||||
Net debt / EBITDA (rolling 12 months) * | 0.15 | - | 0.35 | ||||
Gross investments ** | 0.4 | 0.4 | -8 | 1.2 | 1.3 | -6 | 2.6 |
Personnel at the end of the period | 428 | 437 | -2 | 450 | |||
outside | 89 | 100 | -11 | 98 | |||
Brand sales *** | 81.5 | 64.4 | 27 | 209.1 | 176.8 | 18 | 250.8 |
outside | 50.7 | 39.5 | 28 | 145.8 | 111.4 | 31 | 156.6 |
proportion of international sales, % | 62 | 61 | 70 | 63 | 62 | ||
Number of stores | 151 | 147 | 151 |
The change percentages in the table were calculated on exact figures before the amounts were rounded to millions of euros. The figure for comparable earnings per share takes account of similar items as comparable operating profit; tax effect included.
* Due to the adoption of IFRS 16, the ratio of net debt to EBITDA at year end was reported for the first time at the end of the financial year 2019. The key figure is calculated based on comparable rolling 12-month EBITDA.
** The figures for gross investments do not include the impact of IFRS 16.
*** Brand sales are given as an alternative non-IFRS key figure. Brand sales, consisting of estimated sales of
“Wholesale sales and prompt adjustment measures helped
“The coronavirus pandemic continues to heavily impact the fashion industry and specialty retail sector across the world. In managing this exceptional crisis, in addition to an ability to react quickly and an internationally attractive and relevant brand, Marimekko’s strengths have been a comprehensive range of lifestyle products and a diverse business and distribution channel model. With the pandemic, consumers have become increasingly interested in home decoration, which has resulted in robust growth in sales of our home products. The relaxed feel of our ready-to-wear collection – now more evident than before – also appeals to consumers in these unusual circumstances. While the pandemic has understandably reduced footfall in retail stores, we have managed, to a large extent, to offset the decline in retail sales with online sales. We have also achieved strong growth in our wholesale sales.
“In the July-September period of 2020, our net sales grew by 10 percent despite the challenging situation and amounted to
“In the January-September period of 2020, our net sales fell by 5 percent due to the impacts of the coronavirus pandemic and amounted to
“The coronavirus pandemic has expedited the transformation of consumers’ purchasing behavior and intensified structural changes in our sector, such as digitalization. It has accelerated the shift to digital sales channels among customers — including new customer groups — and this will influence Marimekko’s distribution channel choices in the future. The pandemic has also increased surplus inventories in the industry, and the recession created by the pandemic has made consumers more price sensitive. These changes in the operating environment pose challenges to the profitability of the fashion industry, which also puts Marimekko’s operations under increasing pressure.
“During the year, we have successfully navigated the crisis and adjusted our operations to the exceptional circumstances through significant, and partly temporary, savings in fixed costs. At the same time, we must look after our long-term competitiveness and financial position. To strengthen these aspects and to respond even better to the requirements of the new operating environment, we unfortunately had to conduct consultative negotiations with our personnel in order to reorganize and streamline our operations in
“The pandemic situation continues to be of concern in many of our markets, with new waves of infections being reported. This increases uncertainty in the final quarter of the year, which includes not only the holiday sales season but also other significant sales campaigns for
“With disruption come also new opportunities and I firmly believe that our new organization and our long-term growth strategy are strongly positioned to capture the future growth opportunities for the sustainable, timeless and unique
Market outlook and growth targets for 2020
The coronavirus that spread rapidly all over the world during the first quarter of 2020 created the worst crisis experienced by the global fashion industry and specialty retail sector in decades. It has taken uncertainty over the global economy to a completely new level and has an impact on consumers’ purchasing behavior. The exceptional circumstances can have an impact on Marimekko’s sales, profitability and cash flow. Furthermore, the global crisis may affect the operational reliability of the company’s value chain. The duration of the pandemic, new infection waves and the way the crisis is handled by different countries influence the depth of the economic recession in different markets.
The
In 2019,
Licensing income in 2020 is forecast to be higher than in the previous year thanks to better-than-expected estimated development.
The importance of e-commerce in the company’s business has continued to grow in 2020, and online sales are expected to perform well in the final quarter of the year as well. The full-year outlook for retail sales essentially depends on the return of customer flows to stores during the rest of the year in each market as well as possible new infection waves which may require temporary closures of Marimekko’s own retail stores. Full-year wholesale sales will be supported by nonrecurring promotional deliveries in
At the outset of the coronavirus crisis,
To secure profitability and cash flow,
Further information:
Elina Anckar, CFO, tel. +358 9 758 7261
MARIMEKKO CORPORATION
Corporate Communications
Tel. +358 40 584 6944
anna.tuominen@marimekko.com
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