Marimekko - Steady as she goes
Marimekko’s Q3 brought no real surprises as the net sales were in line with our estimates while profitability was a touch lower mainly due to higher-than-expected marketing investments. We continue to see the current pricing relatively neutral and reiterate TP of EUR 13.0 with recommendation at HOLD.
Domestic wholesales down as expected, strong retail
Marimekko’s Q3 net sales were largely in line with our estimates at EUR 47.2m (Evli est. EUR 47.0m, Q3/23 EUR 47.9m). As expected, Finnish wholesale sales decreased notably due to the timing effect of non-recurring promotional deliveries. International sales grew in line with our estimates. Domestic retail was solid as the net sales grew 8% y/y in a tough environment. Internationally, net sales grew strongly in Scandinavia as retail sales grew 45% y/y and total net sales by 23%. APAC net sales grew 9% y/y, while still rapid, the growth missed our estimates slightly. Adj. EBIT amounted to EUR 11.1m (EUR 12.0/12.4m Evli/cons.), reflecting a margin of 23.5%. The lower-than-expected profitability was solely related to higher other operating expenses than we expected. The main driver behind the increased other operating expenses were the company’s planned marketing investments.
Expecting growth to pick up in 2025E
Marimekko kept its guidance unchanged, the net sales are expected to grow y/y in 2024, and comparable EBIT margin is estimated to be approximately some 16-19%. With the actual figures published for Q3 and no major estimate adjustments for Q4, we model net sales of EUR 180.6m with growth of 3.7% y/y and EBIT of EUR 30.8m with a margin of 17.0% for 2024E. We expect that employee expenses will keep rising y/y in Q4 due to the overall salary inflation in addition to Marimekko’s strong own retail performance. We continue to forecast an increase in sales growth for 2025E, driven by a boost in domestic sales along with continued international growth. We now project net sales of EUR 193.6 million and EBIT of EUR 35.6 million (EBIT margin of 18.4%) for 2025E.
HOLD with a TP of EUR 13.0
Marimekko is priced at 16-13x EV/EBIT and 21-18x P/E based on our estimates for 2024-2025E. The pricing is largely in line with the aggregate peer group as it is trading above its premium goods peers yet below the luxury goods peer group.