Marimekko - Domestic market presents challenges

Lower than estimated domestic sales drove the earnings miss

Marimekko delivered Q4 figures that were lower than estimated for both net sales and EBIT. Net sales grew by 5% to EUR 50.6m in Q4 (52.9/53.6m Evli/cons.). Clear disappointment on the net sales side was domestic wholesale, which missed our estimates by a large margin. On the other hand, APAC kept delivering growth as we had estimated. Adj. EBIT amounted to EUR 8.3m (9.0/8.7m Evli/cons.), reflecting a margin of 16.4% while we had estimated adj. EBIT margin of 17.1%. The lower profitability was largely driven by the volume miss due to operational leverage.

Two-sided development of Q4 expected to continue in 2024

Marimekko expects its net sales to grow in 2024 while adj. EBIT margin is estimated to be 16-19%. The two main drivers for Marimekko, Finland and APAC developed in different directions during Q4, we estimate this to continue to 2024. In 2024, Marimekko aims to open 10-15 new stores and shop-in-shops, and most of the planned openings will be in Asia. Due to the difficult market environment, net sales in Finland are expected to be approximately at the level of 2023. We previously estimated growth of 1.7% y/y in Finland for 2024, with our updated estimates, we drop our growth estimate to 0.7%. For APAC, we have also dropped our growth estimate slightly yet still estimate healthy growth of 12.3% y/y. After the adjustments, our net sales estimate is now at EUR 181.9m (prev. EUR 188.3m). With slower growth and higher fixed costs, we estimate EUR 33.0m adj. EBIT for 2024 (prev. EUR 35.3m) with a margin of 18.2%.

HOLD with a TP of EUR 11.5 (12.0)

Based on our updated estimates for 24-25E, Marimekko is priced at roughly 14-13x EV/EBIT and 19-17x P/E. The pricing is roughly at par compared to our premium and luxury goods peer groups which trade at 14-13x EV/EBIT and 18-17x P/E (avg. between the peer groups).