Release Date: November 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Marimekko Oyj (OHEL:MEKKO, Financial) achieved nearly record-level net sales in Q3, totaling EUR47.2 million, despite challenging market conditions.
- Retail sales globally increased by 12%, with an 8% increase in Finland, demonstrating strong brand demand and effective team performance.
- The company's comparable operating profit remained strong at EUR11.1 million, equating to 23.5% of net sales.
- International sales grew by 9%, with notable progress in the Asia Pacific region, where sales increased by 9%.
- Marimekko Oyj launched a new e-commerce platform to enhance personalized customer experiences and opened new stores, including one in Shanghai, expanding its global presence.
Negative Points
- Net sales decreased by 1% compared to the previous period, primarily due to lower wholesale sales in Finland.
- Higher fixed costs, including increased marketing and personnel expenses, negatively impacted operating profit.
- The EMEA region experienced a decline in net sales due to ongoing brand and distribution modernization efforts.
- Logistics costs increased, weakening the relative sales margin, although discounts remained consistent with the previous period.
- The company faces uncertainties related to the global economy, which could impact consumer confidence and purchasing power, particularly in Finland.
Q & A Highlights
Q: How do you see marketing costs developing in Q4 given the higher expenses in 2023?
A: Elina Nckar, CFO: Marketing expenses are expected to grow this year. By the end of Q3, marketing costs were 6% of net sales, up from 5% last year. We have planned investments into the long-term growth of the company.
Q: Why are inventory levels up both year-on-year and quarter-on-quarter?
A: Elina Nckar, CFO: We need to ensure enough products to meet top-line expectations and mitigate supply chain disruptions. The volatile global environment also affects inventory levels.
Q: Can you elaborate on Marimekko's promotional strategy, especially regarding price reductions?
A: Tiina Alahuhta-Kasko, CEO: The market environment is tactical, requiring competitive strategies. Recent promotions include mid-season sales and our friendship campaign in Finland.
Q: How would you describe the Finnish retail market, and do you see any improvements?
A: Tiina Alahuhta-Kasko, CEO: The macro situation remains weak with low consumer confidence. However, Marimekko achieved an 8% omnichannel retail sales increase in Finland, demonstrating strong brand and collection performance.
Q: Why is EBITDA typically higher in Q3, and net sales high in Q4?
A: Tiina Alahuhta-Kasko, CEO: Our industry has a seasonal nature, with euro-denominated net sales and earnings focused on the second half of the year.
Q: Will Marimekko consider paying an extra dividend for 2024 given the strong financial position?
A: Tiina Alahuhta-Kasko, CEO: This is a matter for the AGM. Our dividend policy is to pay at least 50% of EPS, and historically, we have been a stable dividend payer.
Q: Can you provide more details on the modernization efforts in the EMEA region?
A: Tiina Alahuhta-Kasko, CEO: We are undertaking similar efforts as in other markets, like Scandinavia, where we've revamped flagship stores and strengthened our presence. Plans include opening a flagship store in Paris to enhance our retail presence.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
