Good afternoon. My name is Anna Tuominen, and I'm the IRO of Marimekko, and it is my pleasure to welcome you to Marimekko's full year 2023 results webcast. In just a few minutes, our President and CEO Tiina Alahuhta-Kasko will walk you through our latest results, and after that we'll have a Q&A session with Tiina and our CFO Elina Anckar. To ask questions, you can type in those questions already during the presentation using the chat function of the platform. Without further ado, Tiina, please go ahead.
Thank you, Anna. Good afternoon also on my behalf. It's my pleasure to walk you through Marimekko's financial statements 2023. Let's start first from the fourth quarter, the last quarter of the year. How did we do? Well, we did well as our net sales grew and our operating profit improved further. In total, our net sales increased by 5%, boosted by international sales that grew by 10%, as especially wholesale sales developed favorably both in the Asia-Pacific region and North America, and also the licensing income grew.
In our home market in Finland, our net sales also enjoyed growth by 2% as retail sales increased. This really represents, in our opinion, a good, strong outcome as the market in general in Finland has been very challenging and the operating environment very tactical. With the increased net sales, especially, our comparable operating profit margin increased to 16.4% of net sales. The improved relative sales margin supported the relative profitability. On the other hand, an increase in fixed costs had a weakening impact on operating profit. We continued systematically our investments in our growth according to our strategy.
Overall, when we look at the total year of 2023, our net sales increased by 5% and our comparable operating profit margin increased to 18.4%. Our Board of Directors proposes to the AGM that a dividend of EUR 0.37 will be paid for 2023. 2023 was the first year of Marimekko's new strategy term spanning to 2027, which is all about accelerating and scaling up our business and growth, especially in the international markets.
The growth in our international sales, the development of our store network, entering into new markets in Southeast Asia, new digital sales channels, and also interesting brand collaborations with the likes of adidas and IKEA all provide concrete proof of the progress that we have made during the first year in the strategy term in 2023. Looking at 2024, having yet another kind of strong year in our books, I believe that we're very well positioned.
2024 will also be the 60th anniversary of Marimekko's most iconic print of all times, Unikko. This will mean that Unikko will appear throughout the year in numerous special collections as well as special events around the world. And most of all, we see this special anniversary as a great opportunity both from branding and commercial points of view to continue scaling up our growth even in the more challenging general market environment.
Looking into more details behind our financial statements, starting from net sales in the fourth quarter. As mentioned, the net sales increased by 5% and the increase in net sales was driven particularly by the growth in international sales, but also by the positive development of Finnish retail sales. International sales altogether grew by 10%, especially the wholesale sales in Asia-Pacific and North America grew, and also then the licensing income increased significantly. The challenging general market situation and highly tactical business environment impacted both retail and wholesale sales in Finland, but we still grew in the domestic market by 2% as retail sales grew. I think that really demonstrates the continued appeal and desirability of our strong lifestyle brand.
Then looking into the cumulative net sales for the full year of 2023, we saw an increase of 5% to EUR 174.1 million, and the net sales were boosted in particular by the increase in international wholesale sales. International sales altogether grew by 10%. Sales in Finland grew by 1% as retail sales increased despite the challenging macroeconomic environment.
When we look at our kind of performance based on channels, our omnichannel retail sales increased nearly in all market areas and wholesale sales increased in the Asia-Pacific region, in North America and Scandinavia. What is good to note is that our actions to control gray exports weakened wholesale sales in the EMEA region. And in line with also the fourth quarter, licensing income increased. But here even on an annual level, we made a new record high level in licensing income.
Then when we look at our net sales breakdown by market area and by product line, first of all, starting from the breakdown by market area, many of you might remember that accelerating growth in Asia is one of the key strategic success factors in our current strategy term. And we're very proud to say that our net sales in this strategically important Asia-Pacific region increased by 70%.
And this increase we can slightly see in the somewhat a little bit increased share of the Asia-Pacific net sales out of the total net sales. Otherwise, no major changes. When it comes to the split by product line, the share of fashion and bags and accessories grew. So this is part of the normalization to the new normal in the industry after the pandemic. And there are otherwise no major changes in the split by product line.
19 new Marimekko stores and shop-in-shops were opened in 2023, 17 of them in our strategically important market, Asia. Today we have nearly 170, namely 167 Marimekko stores and shop-in-shops all around the world. Actually already nearly 90 of them are based and are located in Asia-Pacific. The second biggest market in terms of store number is our home market, Finland. When we look at our brand sales, which represent the reach of Marimekko's brand through different distribution channels, the cumulative brand sales reached nearly the same level as in the last year, so EUR 376.7 million. In the fourth quarter, 60% of the brand sales came out of our home market, Finland. Moving on to our profitability.
In the fourth quarter, we're proud to announce that our comparable operating profit improved by 19% and landed to EUR 8.3 million, representing 16.4% of net sales. The operating profit was boosted especially by the increased net sales, but also the improved relative sales margin. On the other hand, due to these investments into our growth, fixed costs increased and had a weakening impact on the operating profit. More in detail, what is behind the fixed costs are the increased marketing expenses. Then we also saw higher personal costs in the stores. The relative sales margin was, on the other hand, supported by increased licensing income and lower transport costs. On the other hand, then higher discounts weakened the relative sales margin.
When we look at the cumulative profitability, our cumulative comparable operating profit increased by 5%, landing at EUR 32 million and representing 18.4% of net sales, which represents a high level in the context of our industry. I would say a good outcome in especially this more uncertain general market condition. The operating profit was improved especially by the increased net sales.
On the other hand, the higher fixed costs decreased operating profit, but then improved relative sales margin had a positive effect on the operating profit. Behind the fixed costs, more in detail, are the recruitments made to strengthen the building blocks of international growth, as well as the higher personal costs in the stores. The relative sales margin was, similarly as in Q4, improved by the increased licensing income and lower transport costs.
However, higher discounts that are due to the weaker general consumer demand and the tactical market environment then had a weakening impact on the relative sales margin. Then moving on to some highlights and key events in the fourth quarter. In the fourth quarter, we continued to strengthen our position in the international markets, especially in Asia and in Scandinavia.
First of all, we opened two new stores in Malaysia, which is a completely new market for Marimekko, representing the third new market that we opened during 2023, in addition to Vietnam and Singapore that we entered together with our local franchise partners there in the third quarter of the year. Visibility for our brand were brought also by pop-up stores in the fourth quarter in Hong Kong and Seoul. Altogether in 2023, 11 pop-up stores spread the word of Marimekko and increased our awareness and supported our sales.
In the fourth quarter, we also took the exciting step to open a flagship store in Copenhagen to strengthen our position in Scandinavia further. The new flagship store represents our most dynamic new store concept. Its role is, of course, in addition to supporting our store sales and omnichannel sales, is to really increase our awareness and cement our overall fashion and design industry positioning more widely in Scandinavia.
Moving on to the outlook for 2024 and starting from the general view. So, of course, the uncertainties related to the development of the global economy, such as the geopolitical tensions and their impact on the general economic situation and general cost inflation, influence consumer confidence, purchasing power and behavior, and thus, as a result, can have an impact on our business in 2024, especially in our important home market, Finland.
The different exceptional situations may cause even significant disruptions in production and logistics chains, and this way can have a negative impact on our sales profitability and cash flow. But of course, we are, as always, closely monitoring these different situations and factors and will adjust our operations and plans according to the circumstances.
Moving on to the net sales development. Firstly, starting from Finland, our important home market. So in 2024, despite the weak market situation, we expect the net sales in Finland to be approximately at the level of the previous year. What is good to note is that sales in Finland in the newly started year are impacted by the weak general economy and low consumer confidence, as well as the development of purchasing power and behavior. The tactical operating environment also has an impact.
What is also good to note is that the size and timing of non-recurring promotional deliveries in wholesale create volatility to the Finnish sales estimate. Moving on then to the international sales, we estimate international sales to grow in 2024. The Asia-Pacific region, which is our second largest market in terms of net sales, we also expect to see growth in this region.
And in 2024, our aim as a company is to open approximately 10-15 new Marimekko stores and shopping shops. And similarly, as in the past years, most of these planned openings will be in Asia. Few words about seasonality. Because of the seasonal nature of our business, the major portion of our EUR-denominated net sales and operating result are traditionally generated during the second half of the year.
As mentioned, our net sales are expected to grow in 2024, but net sales in the first quarter of the year are estimated to be approximately at the level of the previous year, as wholesale sales, for example, are partly impacted by some of the wholesale deliveries in Finland in the first quarter of 2024 being transferred to the fourth quarter of 2023. Licensing income, on the other hand, is forecasted to be around the previous year's record level. A few words to continue on growth investments and costs. So, of course, we develop our business with a long-term view and we aim to scale our profitable growth in the upcoming years. Fixed costs in 2024 are expected to be up on the previous year. And of course, the general cost inflation continues to affect also Marimekko in 2024.
Personal expenses are impacted, for instance, by the general pay increases in different markets. 2024, as mentioned early, is the year of the 60th anniversary of our most iconic print, Unikko, which of course provides us with unique opportunities to grow our awareness and support our business. Marketing expenses are expected to increase.
Early commitments to product orders from supplier partners, which is typical of our industry, but partly further emphasized by the exceptional situations, weaken our company's ability to optimize product orders and respond to any rapid changes in demand and consumer behavior, which can also increase risks related to inventory management and relative profitability. But of course, as always, we work actively to ensure the functioning production and logistic chains, to avoid any delays, to mitigate the negative impacts of the generally increased costs, and to enhance inventory management.
So these are all normal kind of ways of operating for us. Then moving on to the financial guidance for 2024. So we estimate our net sales to grow from the previous year and comparable operating profit margin is estimated to be approximately some 16%-19%. The development of consumer confidence and purchasing power, especially in Finland, global supply chain disruptions, and the general inflation development do cause volatility to the outlook for 2024.
Already at the beginning of the presentation, I mentioned about the proposal for dividend for 2023, just to kind of reiterate. So our board of directors is proposing to the annual general meeting that a dividend of EUR 0.37 per share be paid for 2023. So with these words, I would like to thank you for listening to our Financial Statements webcast. And now we're ready for some Q&A. I would invite our CFO, Elina, to join me here at the stage.
Thank you very much, Tiina. And I must say that we have received so many questions that hopefully we have time for a majority of them. So I will actually try to group them a little bit that we will talk about the same subject. And I would actually start from the balance sheet side because I can reply to myself. So there is a question regarding our cash flow, particularly the receivables, the sales receivables, which are now higher than historically. Or if you look at the numbers before that, is that a normal level going forward or is there something exceptional in the level of receivables currently? I'm sure that you've noticed that we have improved our cash flow very nicely. And if we look at due to the lower inventory values. But when looking at the sales receivables, that's true that they are higher.
That is also reflecting that we are growing internationally. One could say that the payment terms are slightly longer at the international markets with some customers. Of course, like because we are able to generate the cash from elsewhere, we're able to manage that. Then there is a question about our EBITDA margin range that because we reiterated our range, which we had also last year that's mentioned that is quite wide. You also mentioned several factors that can cause volatility. Is it possible to mention that what is the most important factor of uncertainty? What would we actually raise here?
So if we sort of go back to my earlier presentation, so I think that overall, like it is related to the kind of situation in the general world economy and the geopolitical tensions and the impact that they might have to consumer confidence and purchasing power and behavior and the overall inflationary situation or any kind of exceptional situations that may cause disruptions to the value chain. So I would say that this is the single biggest volatility element.
Yeah, I would have said the same thing.
Yeah, I would have said exactly the same. Then there is a question regarding Asia-Pacific, one of our main growth areas, the second largest market for us as well. So does this area still offer high growth in 2024? Is the customer resilient in this area?
So as mentioned in my presentation, Asia represents accelerating growth in Asia represents a key strategic success factor in our scale strategy for 2023 to 2027. So accelerating growth in Asia is something that we intend to do and continue to do. And just to give you a little bit of context, so understanding the size of the different markets within Asia, and given that today we have there 89 Marimekko stores and shopping shops, there's still so much room for us to grow.
So when we look at the new year, as mentioned, we do estimate that our net sales in the Asia-Pacific region will grow, and we do estimate that overall our international sales will grow. So we have high confidence in the Asian market as a key geographical market for our international growth. Yes. And I'm browsing here because we also have a question regarding the sales in Finland and especially related for the non-recurring promotional deliveries.
So I can actually answer this myself. So there is a question that how did the non-recurring promotional deliveries affect the wholesale sales in Finland during 2023? And as we have mentioned many times, we do actually are very rigid in terms of what we write in our financial report that we always pick up the biggest impactful factors every quarter and per year. So we have actually mentioned that during the Q3, they impacted to the growth. And in Q4, we have actually raised in terms of the domestic wholesale that they were boosted by some wholesale deliveries in the first quarter of 2024 being transferred for the fourth quarter of 2023.
Hopefully this came a little bit light for this question, which was raised by quite many of you. Then there was a question regarding the term that we have actually used in our financial report. We talk about the volatility of the market. Could you a little bit elaborate what do we mean about that?
If we take Finland as an example, our important home market, and if we look at the statistics, so we have, of course, also according to statistics seeing that the Finnish economy is in a weak state and also the kind of consumer confidence has been low. What that then very easily translates is into a price-sensitive consumer behavior. This way, competitive environment also in our industry that reflects this price sensitiveness. This is what we mean by tacticality.
There is a question which is somewhat related for this as well. How do you interpret the recent changes in consumer behavior in Finland? Do consumers still value quality and sustainability or are they more driven by price?
Reflecting also to our results in the fourth quarter and in the past year, the fact that our own retail, omnichannel retail still saw growth despite the weak general market conditions, to us, it demonstrates the continuous desirability and appeal of our brand. If we sort of break down where does that desirability and appeal for our brand come from, it is very much linked to our ambitious goals to develop sustainability. It is very much connected to our high quality standards and timeless and long-lasting design.
When it comes to this tacticality, so as mentioned in my earlier reply, when the market environment is weak and when the consumer purchasing power and confidence are now down, that in the competitive environment translates into actions that reflect the price-sensitive consumer behavior. I do definitely believe that the consumers still very much value the quality, high quality and high ambition in sustainability development at Marimekko. I think those are some of the strong points of our brand that continue to be relevant.
Thank you very much. Still continuing on that because we have a question that's regarding sustainability. You already answered that it's still an important factor for the customers. But do we think that this differs between Europe and Asia?
Well, I would say that there are differences in the kind of in the level of knowledge that consumers have about sustainability-related matters in different parts of the world. However, the connecting node is that we see that overall around the world, the importance of sustainability in the eyes of consumers is constantly increasing. I would say that in the Nordic countries, we are quite advanced. We are quite well educated and want to learn constantly more about the sustainability aspects. And then we can see that in some other parts of the world, we are in the earlier stages in this development. But the big picture, as mentioned, is that the expectations and interest to sustainability aspects of the business is increasing everywhere.
Are we planning on launching any new group-wide ESG initiatives in 2024?
So some of you might remember that we have a very high ambition in our sustainability strategy spanning from the newest term, spanning from 2020 to end of 2025. Some of you might also remember that we have committed ourselves into the Science Based Targets initiative to set our science-based targets in line with the Paris Climate Agreement. Currently we are actually in process of setting those targets. So we will be then communicating more about them once those targets are approved. So that is very exciting and very meaningful for us.
We have already talked about the current geopolitical global tensions and they're bringing volatility to our business. There was just a question that do we take risk management actions to manage these? I can ensure that yes, we are working definitely on those as well. A particular question related for the brand sales. In 2023, they decreased for the first time since 2017. There is a question that why what does it signal to you? I think it's an excellent question. I think it's good for us to explain it why it's not a signal for us because the background is so that when we do calculate the brand sales, we always take the retail sales as they are. Then we convert the wholesale sales to retail sales with certain multipliers.
But we also take into consideration all the licensed products which have been sold worldwide in Marimekko licensed products during the period. And regarding brand collaborations, you know that we have had they are not something that they're stable every year. So regarding those, if there are like more campaigns another year and less campaigns this year, that is the main reason for this decline. So it doesn't signal anything for us. We know the background of the numbers.
Yes. And yeah, there's so many questions. So let me see what we still have time. There is actually two questions regarding possible potential M&A. Like would we consider doing that kind of transactions in 2024 and what kind of targets and would that be a boost to boost growth in 2024?
Well, that is not part of our growth plan. So we are focusing on the Marimekko brand and that has proven to be a good route for us.
But thank you for excellent questions. So seems to be interest for many. And then there is a particular question related to the fixed costs. Like, for example, we see growth in costs 2024. So we actually give in our market it's not a guidance, it's like market outlook that we expect the marketing and salaries to be increased. So what can you do to mitigate the increase in costs?
So I would say that as we have chosen that we are investing into this company's growth, so we make cautious decisions that we want to invest more in marketing. And then in terms of the personnel costs, we know that the salary increases are impacting them. But then on the other hand, then we need to find the profit levers elsewhere. So that is the way to mitigate it.
So by higher sales or better profit margin, gross margin or less fixed cost elsewhere. So that is the part of the puzzle that we are building for every year and every day and every month. And then last but not least, we still have quite many actually. So maybe I could take the one like how do we see the rising interest rate environment affect Marimekko's business in general and the results? Of course, the rising interest rates do have impact for our consumer and consumers' purchasing power. But we have discussed that quite widely already. But as a company, we are like almost debt free. So we have like operational limits which we are using. So from that point of view, like we don't have the issue with the rising interest or financial costs as a company.
Maybe then to reflect or kind of build on what you mentioned on the consumer purchasing power side. What is an asset or an advantage in our lifestyle brand portfolio is that we have this kind of wide portfolio of products of very different price points. Of course, understanding the climate in which we operate, we can always adjust the type of products and the type of products in our collections to best serve customers also in this more price-sensitive kind of environment.
Yes. And then there is actually a question related for the newly established technology unit. Like can we tell something about their roadmap or their top priorities for this year? Yeah, something more tactical.
Actually end-to-end digitality to boost efficiency and support our growth is another key strategic success factor in our scale strategy. This technology unit was merged from our digital business and IT units. The main objective of this team is actually to progress in the digitalization of Marimekko's wider value chain, in addition to continuously developing our online commerce capabilities and user experiences. It's a very wide and holistic role in capturing the value that technology and data provide for Marimekko, both from an efficiency but also from a value add to consumer point of view.
Thank you very much. Then we actually do have a question regarding our strategic priorities. We had first like what is the most important strategic target for this year? But then we have another question like they would like to know a little bit more than just the one top priority. So maybe you could mention some other ones like top which one you would like to choose.
Of course, the most important strategic priority for us in 2024 in line with our scale strategy, which is all about scaling up our growth, especially the international markets, is then to grow in the international markets. That is, of course, a key priority for us as there's so much potential for Marimekko out there in the world, reflecting and understanding our strong financial performance from year to year, understanding the increased interest towards our brand and overall the megatrends that shape consumer behavior, all favoring our brand's potential.
That is the most important thing. Otherwise, we continue on our scale strategy journey. We will be focusing on the aforementioned end-to-end digitalization work, improving further our digital experience. We will be constantly improving and further strengthening our collections. The Unikko anniversary year is a great opportunity to bring also new, exciting, special products and limited edition products to the market. We're also launching a Marid enim, our first denim collection ever, hitting the market in the summer.
We are further developing our loyalty program, our community program that was launched in the last year, which is an important part of our kind of community engagement. And then, of course, we're progressing also our sustainability development. As I mentioned, we are going to be submitting the targets for the Science Based Targets initiative. So these are just some examples. And then at the same time, of course, we want to take good care of our important domestic market, Finland. That goes without saying. And our long-term intent is to constantly improve our market share in this market. For 2024, we have estimated that the net sales in Finland will be approximately at the level of 2023.
Thank you very much, Tiina. And as we always want to end this for a very positive note, and you already mentioned the Unikko anniversary, and somebody has smartly asked that shouldn't it actually boost sales also in Finland? And I think you already explained more or less the possibilities with our fantastic sixth year's anniversary.
So understanding that, of course, the external environment today is uncertain and there are some volatility elements, as we all know. But I couldn't imagine a better kind of platform than the anniversary of our most iconic print, both in Finland and international, that will provide us a unique opportunity to build both brand and commercial moments through the course of the year. So we're very excited about this celebratory anniversary. Thank you so much.
Thank you.