Marimekko has stronger 2018, now focused on international expansion
Marimekko had a reasonably good 2018. It saw sales rising 9% last year and comparable operating profit was up by 42%, but the fourth quarter on the surface appeared to be more challenging with sales broadly flat.
Actually, they dipped ever-so-slightly in the last three months, falling to €29.7 million from €29.8 million. But on the plus side, the company saw growth in retail and wholesale in Finland and a successful Christmas season.
The negative issue behind the firm only achieving flat sales during the quarter was basically connected to a calendar shift as wholesale deliveries to the Asia-Pacific region were moved into 2019’s Q1, while they had occurred in Q4 during 2017.
The company also said that as expected, Q4 operating profit fell short of the comparison period, as most of the earnings for 2018 were generated during the second and third quarters, which is usual. Operating profit for Q4 was just half of that achieved in the previous Q4 at just €1.2 million and comparable operating profit was €1.6 million, also down from €2.4 million a year earlier, again due to that calendar shift.
Looking at the full year, that net sales increase of 9% meant turnover of €111.9 million. Sales rose in all market areas except North America, where net sales were flat.
Growth came primarily from retail and wholesale in Finland and from wholesale in Asia-Pacific. In Finland, retail sales rose by 10% and saw the company outperforming the sector as a whole.
Operating profit rose to €17.7 million from €8.4 million a year earlier, but this was skewed by a gain from the sale of the firm’s head office. Comparable operating profit was €12.2 million.
And the future? Net sales for 2019 are forecast to be higher but comparable operating profit is expected to be around the same level as in 2018.
President and CEO Tiina Alahuhta-Kasko was cautiously upbeat and said that the “long-term work to build international success continues.” She said the growth during the 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.”
She added: “It was also gratifying that our relative sales margin was at a favourable level and regular-priced sales performed well.”
And she said it was a “very eventful year” with limited-edition collaboration collections with Uniqlo and Clinique giving it “a lot of international visibility alongside our own marketing actions.” It also revamped flagships in Stockholm, Tokyo and Sydney and “devoted greater efforts to marketing and boosting our brand recognition in China.” This year, it has taken the first steps to launch online sales of Marimekko products via WeChat and Tmall.
In fact, this year will see it investing “considerably more in growth than in the past year.” It will revamp its store network and improve IT systems to underpin its digital business.
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