Marimekko Oyj New

Good afternoon. My name is Anna Tuominen. I'm the IRO of Marimekko, and I have the pleasure to welcome you to our Q3 webcast. With me, I have our president and CEO, Tiina Alahuhta, who will walk you through our third quarter results in just a few minutes. And after Tiina's presentation, Tiina will be joined with our CFO, Elina Anckar, and we will take your questions. You can use the chat function on the platform to type in your questions already during the presentation. So we will be ready for that.

But without further ado, Tiina, please go ahead. Thank you so much, Anna, and good afternoon also on my behalf, everyone. It is my pleasure to walk you through our interim report for the third quarter of the year. So let's get started. How did Mare Mekko perform in the third quarter? Our net sales and operating profit increased in this quarter due to the excellent development of international sales. In fact our net sales in Q3 were up by 3% and amounted to 52.1 million euros. Our net sales were boosted especially by the excellent development of wholesale and retail sales in all international markets and this excellent development of international sales in a globally challenging market situation is a true testament for the strong appeal of our brand and a result of the long-term systematic brand building work in this very highly competed fashion and design industry. Then on the other hand, our net sales development was weakened by the decrease in the domestic sales. In Finland, the continued challenging market situation affected our performance. International sales grew by 16% following the excellent development of net sales in all market areas and net sales in Finland decreased by 9%. Our comparable operating profit increased to 13 million which represents 25% of net sales and it was increased by growth in net sales as well as improved relative sales margin. When we look at our performance cumulatively in the first nine months of the year, our net sales increased by 2% to 137.5 million euros as both retail and wholesale sales increased across our international markets. Then our comparable operating profit came to 23.4 million euros representing 17% of net sales. From here we move on to the holiday season, which is of course important in our industry. As typical of our industry in general, the Q4 is important for Maremekko in terms of sales. And it is good to remember that the operating environment is highly volatile and the development of consumer confidence and consumer purchasing behavior, especially in our domestic market, naturally has an impact on our business. And actually, with that bridge, maybe a few words about the operating environment in our domestic market, Finland. The operating environment here is still challenging. After the summer, uncertainties in the global economy have escalated further. And consumer confidence in Finland, for example, has sunk after temporarily improving. Although we see that the Finnish economy has grown driven by exports and investments, it is not yet widely reflected in the daily life of consumers, which is influenced by factors such as growing fear of unemployment, increased fuel prices, expectations for resurgent inflation and higher interest rates. Also surveys indicate that in particular women have reduced their spending on specialty retail purchases over the past year and overall the significance of price in purchasing decisions has been emphasized further. With this domestic economic climate in mind at Maremekko we are continuously developing our collections so that our lifestyle assortment covers an even wider range of price points. without compromising on quality and thereby serves our customers even better than before in this more price sensitive operating environment. Naturally, we also hope that the strengthened economic growth in Finland will gradually start to reflect favorably in consumer buying behavior also in the premium segment in which Mare Mekko operates. But let's look at the net sales and operating profit drivers in the third quarter. Starting with the net sales, as mentioned, net sales increased in total by 3% and they were boosted especially by the excellent development of wholesale and retail sales in all international market areas. In Finland, our net sales decreased by 9%. It is good to remember that in 2026, the non-recurring promotional deliveries in domestic wholesale sales are expected to grow from the comparable year and be weighted in the second half of the year with the growth Thank you very much. However, then we look at the international market starting from Asia Pacific, our second largest market area. Our net sales increased double digit by 10% as both retail and wholesale sales grew. Also overall, we saw, as mentioned, excellent development in international sales and our international sales in total grew by 16% when the development of wholesale and retail sales was excellent in all international markets. Then when we look at the cumulative performance, we saw a net sales growth by 2% to 137.5 million euros, boosted in particular by the growth of retail and wholesale sales in all international market areas. In Finland, the net sales decreased by 6%, as the continued challenging market situation impacted negatively, particularly domestic retail sales. The wholesale sales in Finland declined by 5%, but the non-recurring promotional deliveries in domestic wholesale sales increased from the comparison period. In the international front, again, strong double-digit performance. International sales grew in total by 11%, with all international market areas reporting excellent development. Most growth was accrued in the Asia-Pacific region, our second-largest market area. and in Asia-Pacific region we saw net sales increase by 9% when retail sales in particular developed well. Also wholesale sales and licensing income grew in the region. Then when we look at our net sales development as split by market area or product line, naturally when we saw positive development in international sales, the share of international sales grew that we can see in the optic of the share of, for example, Asia Pacific, North America and Scandinavia. share of the total net sales and then conversely the share of Finland declined. When it comes to the split by product line there are actually no changes. Our omnichannel store network continued to grow in Asia and today we have 184 Mare Mekko stores or shopping shops serving our customers in addition to our online store that serves customers in already 39 countries. Our brand sales in the first nine months of the year amounted to 271.6 million euros and 65% of our brand sales came from outside the home market Finland. Moving on to our profitability. So in the third quarter, our comparable operating profit improved by 3% and totaled 13 million, equaling to 25% of net sales. The operating profit was increased by the increase in net sales and improved relative sales margin, while then on the other hand, the grown fixed costs had a negative impact on the operating profit. The drivers behind the relative sales margin improvement was in particular the margins per product being at the good level. Then the fixed cost grew due to an increase in personal expenses driven by general pay increases, among others, as well as due to higher marketing investments. When we look at the cumulative performance in profitability, so cumulative operating profit is at the good level and the comparable operating profit totaled 23.4 million, so pretty much on par with the comparison period. And from a relative profitability point of view, this equals to 17% of net sales. Our operating profit was weakened especially by increased fixed costs while then on the other hand again the improved relative sales margin as well as the grown net sales had a positive impact on the operating profit development. Our fixed cost grew when we look at the cumulative time scale due to significant growth in marketing costs as well as increase in personal costs driven in particular by the general pay increases in different markets. While then the relative sales margin was strengthened by the unrealized exchange rate differences, increased licensing income and lower logistic costs. Then moving on to all the exciting events in the third quarter, and there were many. So, first of all, in the third quarter we continued to expand the Mare Mekko store network and four new stores and shopping shops were opened in Asia. In addition, 11 smaller Mare Mekko shopping shops and pop-ups delighted customers in Asia and also one pop-up store in Paris, namely in the iconic Galerie Lafayette department stores. The majority of both the big and small openings in the third quarter took actually place in Indonesia and Philippines, which are new markets for Maremekko. We're very excited to have launched in new markets this year. And at the end of September, the grand launch of Maremekko, our arrival in Indonesia, was celebrated, for example, with a fashion show. We also continued our investments into expanding the marmekko phenomenon around the world and we presented our Spring-Summer 2027 collections at Copenhagen Fashion Weeks, which is an investment that of course strengthens our global brand position. Our show drew hundreds of influencers, buyers and media and over 2 billion digital media impressions globally were achieved through this great initiative. Moving on to especially Asia, the key cities in Asia saw the Marimekko Art of Flowers tour taking place. The Art of Flowers tour features Marimekko's floral designs and again introduces new customers to the Marimekko lifestyle philosophy. So this tour together with other events that build recognition really support us on our internationalization journey. In addition to brand events that generate interest, brand ambassadors play a significant role in awareness building, especially in Asia, which is, of course, a key market for Mare Mekko. And we were very happy and honored to introduce and announce the first ever Mare Mekko brand ambassador in Thailand. Her name is Toi Yarinporn, who is an actress and TV host. The Marimekko Art of Printmaking is, of course, what sets us apart from all the rest and it is always at the heart of our engaging initiatives and events. In the third quarter, for example, during the Helsinki Design Week, we showcased New Mare Mekko prints designed by the Danish textile artist or designer Vibeke Roland in the Futuro house, as well as as part of a limited edition capsule collection designed by the Finnish famous fashion designer Rolf Ekrud. In July in Kyoto we saw the launch of a Maremekko exhibition showcasing and telling the story in a wide manner of the Maremekko design philosophy. This exhibition will now actually tour in different cities in Japan for the next two years and again acts as a great vehicle for us to deepen the relationship with our current customers as well as introduce entirely new audiences to the Maremekko brand. Moving on then to the outlook for the rest of the year, or for the full year. In general, of course, there are still significant uncertainties related to the development of the global economy, such as, of course, the tensions related to geopolitics and trade relations, the war in Iran, any rapid changes in trade policies, as well as other uncertainties are reflected in consumer confidence, purchasing power and behavior, and as a result can have a weakening impact on marimekko. In addition, different disruptions in production and logistics chains, as well as changes in these chains caused by these uncertainties, may also have a negative impact on the company. But as always, we're monitoring carefully the different situations and we'll adjust our operations and plans accordingly if needed. A few words about the seasonality. So, of course, due to the seasonal nature of our business, a major portion of our Euro-denominated net sales and operating profit are traditionally generated during the second half of the year. It is also good to remember that the timing between quarters of the non-recurring promotional deliveries in Finnish wholesale and their size typically vary on an annual basis. Licensing income in 2026 we forecast to grow. Moving on to the net sales development starting from our domestic market Finland. Due to the uncertainties in the market environment we estimate the net sales in Finland in 2026 to decrease. The sales in Finland in general are impacted by the uncertain general economy as well as the development of consumer confidence, purchasing power and behavior. And while as discussed there are early signs of general economic recovery, The operating environment in Finland has remained price sensitive and campaign driven and consumer confidence has weakened further which have an impact on the business. In 2026 the non-recurring promotional deliveries in wholesale sales in Finland are expected to grow from the comparable year and be weighted on the second half of the year with the growth of the promotional deliveries taking place in the fourth quarter of the year. When it comes to the international sales, we estimate international sales to grow in 2026. We also estimate the net sales in Asia-Pacific region, our second largest market area, to increase. And in 2026, the aim is to open approximately 15 to 20 new Maramekko stores and shopping shops, and most of the planned openings will be in Asia, as in many of the past years. A few words about growth investments and costs. So fixed costs in 2026 are expected to be up on the previous year. Of course, the general cost inflation continues to also affect maremekko in 2026 and marketing expenses are expected to increase. There are, of course, uncertainties related to the global production and logistic chains, which may, for example, increase cost or cost delays and thus have an impact on the company's sales and profitability. And the ongoing war in Iran may increase production and logistic costs. But as always, we work actively in various ways to ensure competitive and functioning production and logistic chains to mitigate increased costs and other negative impacts to avoid delays and to enhance inventory management. We today reiterate our financial guidance for 2026. So the Maraneko Group's net sales for 2026 are expected to grow from the previous year and the comparable operating profit margin is estimated to be approximately some 16 to 19 percent. The development of consumer confidence and purchasing power in our company's main markets in particular caused significant volatility to the outlook in 2026. And this development is strongly impacted by the rapid changes and uncertainties in geopolitics and global trade policy, among others. In addition, different disruptions in global supply chains can cause volatility to the outlook. But with these words, I will say thank you for listening and we can open up for the Q&A.

Thank you, Tiina. There's already a few questions, but if you have more questions in mind, please use the chat function on the web platform. And let's have Elina here as well. Maybe we can start with some questions related to the Finnish market, as that's a big part of Marimekko's business. And the first question relates to this sort of longer term challenging market environment. As the Finnish consumer market has been weak for already several years, why do you think it's impacting the sales this year especially? The question is, it hasn't been visible the previous years, but I would like to maybe correct that we have actually been speaking about this already last year, for example, in the second half of the year. But is there a special reason why we're seeing the effect now?