Marimekko - Facing tougher comps in APAC

Market environment remains unpredictable

Consumer confidence in Finland remained subdued in the second quarter, with the period being deemed unfavorable for purchasing durable goods and intentions to consume staying low. According to ETLA Economic Research, the consumption of durable and semi-durable goods should remain subdued throughout the year while the momentum should pick-up in 2025. Globally, consumer companies have reported deterioration of the market environment during the first half due to macroeconomic and geopolitical challenges. Conversely, companies have reported strong performance in the Japanese market, an essential region for Marimekko in APAC.

Tougher comps for APAC yet continued growth expected

Marimekko’s net sales grew by 28% y/y in APAC during the second quarter of last year driven by strong wholesale sales and licensing income. Marimekko has typically had its strongest licensing revenue generated during a single quarter, and we assume that this year, the strongest licensing was witnessed during Q1/24 as Marimekko’s licensing net sales were EUR 1.4m. For the full year, we forecast licensing revenue of EUR 3.3m, or roughly at the level of last year. In the domestic market, we expect low single digit retail and wholesale growth in Finland for Q2. We anticipate substantial decrease in domestic wholesale sales during the second half as we expect lower underlying wholesale demand in Finland and lower promotional deliveries. After only slight downward revisions to our estimates, we model net sales of EUR 42.4m for Q2/24E and EUR 181m for FY 2024E and adj. EBIT of EUR 6.8m for Q2/24E and EUR 33.0m for FY 2024E.

Valuation back at neutral

Marimekko trades at 21-18x P/E and 16-14x EV/EBIT on our estimates of 2024-2025E. The valuation has neutralized since our latest update and the company trades in line with our Premium and Luxury Goods peer groups (avg. for the aggregate). We retain our TP of EUR 13.0 and rating at HOLD.