Marimekko - Outlook in focus
Marimekko reports its Q4/24 figures on 19th of February. We expect that difficult market conditions have continued to challenge the company during Q4 in Finland. We retain our TP at EUR 13 yet revise our recommendation to ACCUMULATE (prev. HOLD) to match the updated ratings methodology (see page 3).
Domestic demand should start to recover slowly in 2025
Data from the Fashion and Sports Commerce Association of Finland indicates that domestic demand for fashion declined last year, primarily due to a decrease in demand for clothing. Although domestic consumer confidence still lingers at relatively low levels, it has shown improvement from the lows experienced during 2022-2023. The Bank of Finland expects that the Finnish consumer spending will start its slow recovery in 2025, falling interest rates being the main driver. In line with this, according to the estimates by ETLA Economic Research, the private consumption of durable and semi-durable goods should recover after a period of declining consumption during 2022-2024. According to consensus data by Bloomberg, the median estimate for Finnish real GDP growth is 1.5% in 2025, while the estimate for last year is at -0.5%.
Expecting slight sales growth for Q4 driven by Int’l sales
Marimekko’s international sales grew 7% during the first three quarters of the fiscal year with especially Scandinavia and North America showing strong growth (18% and 16% respectively). The company’s largest international market APAC grew 11% while sales in EMEA declined. We now model revenue growth of nearly 11% for the company’s international markets during Q4 while for Finland, we expect sales decline of 2% as we estimate slight growth for retail while wholesale should continue to decline due to the timing effect of wholesale promotional deliveries. Regarding profitability, we have marginally increased our estimates for operating expenses due to anticipated continued OPEX investments impacting profitability in Q4. We now estimate dividend proposal of EUR 0.40 per share or roughly 70% of 2024E EPS, yet Marimekko could pay an extraordinary dividend on top of the regular one due to the strong balance sheet position. For 2025E, we foresee sales growth to resume in Finland, with improved profitability from operating leverage and lower relative OPEX investments.
ACCUMULATE (prev. HOLD) with a TP of EUR 13.0
After only slight negative estimate revisions, we keep our target at EUR 13.0. Marimekko is priced at 14-12x EV/EBIT based on our estimates for 2025-2026E. The company trades at a discount to both its premium and luxury goods peers on our estimates. In addition, the pricing presents a discount to the company’s own historic multiple levels and the fair value derived from our DCF.