FINANCIAL STATEMENTS BULLETIN OF MARIMEKKO CORPORATION, 1 Jan–31 Dec 2021: Marimekko’s net sales and result development was excellent also in the fourth quarter. Year 2021 was the best in the company

Marimekko Corporation, Financial Statements Bulletin, 15 February 2022 at 8.00 a.m.

FINANCIAL STATEMENTS BULLETIN OF MARIMEKKO CORPORATION, 1 Jan–31 Dec 2021: Marimekko’s net sales and result development was excellent also in the fourth quarter. Year 2021 was the best in the company history.

This release is a summary of Marimekko’s financial statements bulletin for the January-December period of 2021. 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 fourth quarter in brief

• Marimekko’s net sales grew by 29 percent to EUR 48.1 million (37.4). In Finland, net sales rose by 32 percent, international net sales grew by 23 percent.
• Net sales were boosted especially by a favorable trend in wholesale and retail sales in Finland. In addition, wholesale sales in the Asia-Pacific region and Scandinavia as well as retail sales in North America grew strongly. On the other hand, Marimekko’s actions to control gray exports decreased wholesale sales in EMEA and weakened net sales.
• Operating profit improved to EUR 7.6 million (4.8). Comparable operating profit grew by 35 percent to EUR 7.6 million (5.6).
• Earnings were boosted especially by increased net sales. On the other hand, an increase in fixed costs as well as lower relative sales margin had a weakening impact on result.

Year 2021 in brief

• Net sales grew by 23 percent to EUR 152.2 million (123.6). Net sales were boosted especially by a favorable trend in wholesale and retail sales in Finland. In addition, wholesale sales in the Asia-Pacific region and Scandinavia as well as retail sales in North America grew strongly. On the other hand, net sales were weakened by a decrease in wholesale sales in EMEA and lower licensing income in the Asia-Pacific region.
• Operating profit improved to EUR 31.2 million (18.8). Comparable operating profit grew by 59 percent to EUR 31.2 million (19.6). Earnings were boosted especially by increased net sales but also improved relative sales margin. On the other hand, an increase in fixed costs had a weakening impact on results.

Board’s proposal for dividend

The Board of Directors proposes to the Annual General Meeting that a regular dividend of EUR 1.60 and an extraordinary dividend of EUR 2.00 per share will be paid for 2021.

Financial guidance for 2022

The Marimekko Group's net sales for 2022 are expected to grow from the previous year (2021: EUR 152.2 million). Comparable operating profit margin is estimated to be approximately some 17–20 percent (2021: 20.5 percent). Global supply chain disruptions and generally increased material and logistics costs in particular cause volatility to the outlook for 2022.

Uncertainties related to the development of net sales and result are described in more detail in the Major risks and factors of uncertainty section of this Financial Statement Bulletin. 

Key figures

* The quarterly figures for the review and comparable period have been restated as the accounting principle has changed following the IFRS Interpretations Committee agenda decision. Additional information is presented in the accounting principles of this Financial Statements Bulletin.

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. Reconciliation of alternative key figures to IFRS and management’s discretion regarding items affecting comparability are presented in the table section of this Financial Statement Bulletin.

** Brand sales are given as an alternative non-IFRS key figure, representing the reach of the Marimekko brand through different distribution channels. An unofficial estimate of sales of Marimekko products at consumer prices, brand sales 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 estimated retail value is based on the company’s realized wholesale sales and licensing income. Brand sales do not include VAT, and the key figure is not audited. At the beginning of 2021, the coefficients used to calculate brand sales were adjusted, and the figures for the comparison year have been restated accordingly. Some licensees provide exact retail figures, in which case these figures are used in reporting brand sales. For other licensing agreements, Marimekko’s own retail coefficients for different markets are used.

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

"Strong profitable growth in the fourth quarter concluded our 70th anniversary year and saw Marimekko achieve the highest net sales and operating profit in its history.

The key factors behind our strong performance included our long-term efforts to modernize our brand and lifestyle collections, strengthening our digital business and the omnichannel customer experience as well as increasing our international brand awareness from one year to the next. The new operating practices we have adopted during the pandemic and our agility to react to the constantly changing operating environment were also important factors. I want to take this opportunity to express my heartfelt gratitude to the entire Marimekko team for their tremendous work: faced with difficult market conditions, our personnel have with great passion and perseverance solved challenges created by the pandemic while at the same time continuing our efforts to accelerate our long-term profitable growth.

Marimekko’s business continued to see strong growth in the final quarter of the year. Our net sales increased by 29 percent to EUR 48.1 million (37.4). Growth was driven particularly by wholesale and retail sales in Finland. In addition, wholesale sales in the Asia-Pacific region and Scandinavia as well as retail sales in North America grew strongly. In total, our net sales in Finland increased by 32 percent and our international net sales grew by 23 percent.

Most of Marimekko’s own stores were open, as was the case in the comparison period. Holiday sales went very well, both in our brick-and-mortar stores and the online store, and our omnichannel retail sales grew by 26 percent. At the same time, our wholesale sales increased by 33 percent. Earnings were boosted especially by increased net sales, and our comparable operating profit was up by 35 percent in the October-December period. Comparable operating profit totaled EUR 7.6 million (5.6), representing 15.8 percent of net sales (15.1). On the other hand, operating profit was weakened by higher fixed costs and a lower relative sales margin.

Our full-year net sales grew by 23 percent and amounted to EUR 152.2 million (123.6). Compared to before the pandemic, i.e. the year 2019, the rate of growth was 21 percent. Sales in 2021 grew year-on-year by 30 percent in Finland and 14 percent internationally. The excellent sales performance significantly improved our operating profit. Our comparable operating profit was the highest in the company’s history at EUR 31.2 million (19.6), representing 20.5 percent of net sales (15.9).

At the end of September, together with adidas, a global leader in the sporting goods industry, we launched our second limited-edition sports apparel collaboration collection. The capsule collection was well received and provided Marimekko with valuable visibility around the world. In October, we launched our first limited-edition collaboration products specifically for the Chinese market together with the specialty coffee chain Seesaw. In addition to global brand partnerships, targeted local collaborations in our main markets are an important way to introduce more and more new audiences to Marimekko. Local collaborations also enable us to increase the local relevance of the Marimekko brand.

Marimekko’s visibility in the fourth quarter was also increased by experiential pop-up spaces in five cities around Japan in collaboration with Tsutaya, the country’s largest bookstore chain. All in all, customers got to experience our 70-year-old brand, special collections and the Marimekko Kioski streetwear collection at 32 pop-up stores around the world in 2021. Our omnichannel store network in Asia was further strengthened when new Marimekko stores were opened in Hong Kong and South Korea in the fourth quarter. In total, six new Marimekko brick-and-mortar stores as well as online stores in two countries were opened in Asia in 2021. The digital customer experience in our online store — which was revamped in May — was further enriched in December when the celebration of our 70th anniversary culminated in the launch of Maripedia, a constantly growing digital library opening our extensive print archive to the general public.

The coronavirus pandemic continues to affect business in 2022, but the pandemic has already become part of daily life for companies. Our long-term work to develop the Marimekko brand and our business as a whole as well as our success during the pandemic speak to the effectiveness of our international growth strategy. The year 2022 is the final year of our current strategy period. During the year, we will determine our direction for the next strategy period and review our long-term financial targets. We are planning to organize the company’s first Capital Markets Day in the fall of 2022. Marimekko’s positive development over the past few years, our brand that appeals to an increasingly broad global audience and the megatrends that support our growth story — such as the accelerated digitization and consumers’ changing values and growing interest in sustainability — provide us with an excellent basis for accelerating our long-term profitable international growth in the years to come.

The first collections created under the leadership of our Creative Director Rebekka Bay arrived in our stores at the turn of the year. A growing proportion of our products are made from materials that have a less adverse impact on the environment. As part of our ambitious sustainability efforts, we will also launch the Marimekko Pre-loved second-hand platform later this year to help extending the lifespan of our products. In accordance with our values, we want to be at the forefront in promoting sustainability and, through the power of our example, to move the entire industry towards a more sustainable future.”

Market outlook and growth targets for 2022

The coronavirus pandemic has been the worst crisis experienced by the global fashion industry and specialty retail sector in decades, and it will impact the sector in 2022 as well. The development of the pandemic situation in different markets, political tensions, and increased Inflation impact the global economic trend as well as consumers’ purchasing behavior and, as a result, can have an impact on Marimekko’s business. Furthermore, these factors may affect the operational reliability and efficiency of the company’s value chain.

Finland, Marimekko’s important domestic market, traditionally represents about half of the company’s net sales. Sales in Finland are expected to grow on the previous year. The total value of nonrecurring promotional deliveries in 2022 is estimated to be substantially lower than the year before.

The Asia-Pacific region is Marimekko’s second-largest market and it plays a significant part in the company’s international growth. Japan is clearly the most important country in this region to Marimekko and already has a very comprehensive network of Marimekko stores. The other Asian countries’ combined share of the company’s net sales is still smaller than in Japan, but operations in these countries are constantly growing. All brick-and-mortar Marimekko stores and most online stores in Asia are partner-owned. Net sales in the Asia-Pacific region are expected to increase clearly in 2022. The aim is to open approximately 5 to 10 new Marimekko stores and shop-in-shops in 2022, and most of the planned openings will be in Asia.

Marimekko estimates that both retail and wholesale sales will increase in 2022. Licensing income is also forecasted to be higher than in the previous year. Marimekko will continue actions to control gray exports, but these actions will have a significantly lower weakening impact on the company’s sales and earnings in 2022 than in the previous year. Because of the seasonal nature of Marimekko’s business, the major portion of the company’s euro-denominated net sales and earnings are traditionally generated during the second half of the year.

The coronavirus pandemic causes disruptions in global supply chains. These disruptions can result in delivery delays, and thus impact Marimekko’s net sales and profitability. In addition, disruptions in supply chain can increase logistics costs, which have also grown overall worldwide. Furthermore, net sales and earnings also essentially depend on maintaining the operational reliability and efficiency of distribution centers and logistics in the exceptional situation. Costs of raw and other materials have increased globally. Early commitment to product orders, which is typical of the fashion and design industry, means that changes in raw and other material prices affect the company with a delay. Marimekko is actively working on mitigating the negative effects of increased costs.

Marimekko continues to accelerate its long-term international growth. In 2022, it will invest especially in increasing brand awareness, in digital and omnichannel business, in developing sustainability, in recruitments supporting its growth as well as in IT systems. Fixed costs are expected to be up on the previous year. In 2021, fixed costs were still reduced by partly temporary cost savings. Marketing expenses are expected to grow (2021: EUR 7.5 million).

The instability caused by the coronavirus pandemic in Marimekko’s markets continues. Marimekko is closely monitoring the development of the pandemic situation in each of its market areas and will adjust its operations and plans according to the situation.

Media and investor conference

A conference for media and institutional investors will be held in English on 15 February 2022 at 2.00 p.m. EET. A live webcast of the conference can be followed at https://marimekko.videosync.fi/2021-q4-results/register, and a recording of the webcast will be available at the same address later. Questions can be asked during the live webcast in writing.

Further information:

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

MARIMEKKO CORPORATION
Corporate Communications

Anna Tuominen
Tel. +358 40 5846944
anna.tuominen@marimekko.com

DISTRIBUTION:
Nasdaq Helsinki Ltd
Key media

Marimekko is a Finnish lifestyle design company renowned for its original prints and colors. 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 2021, brand sales of the products worldwide amounted to EUR 376 million and the company's net sales were EUR 152 million. Roughly 150 Marimekko stores serve customers around the globe. The key markets are Northern Europe, the Asia-Pacific region and North America. The Group employs about 410 people. The company’s share is quoted on Nasdaq Helsinki Ltd.?www.marimekko.com

Attachment

• Marimekko_Financial_Statements_Bulletin_2021