Good afternoon and warm welcome to Marimekko's Q2 Webcast. My name is Anna Tuominen, I'm the IRO of Marimekko, and with me, I have our President and CEO, Tiina Alahuhta-Kasko, who will shortly walk you through our results. After that, we have some time for your questions about the results, and Tiina will be joined by our CFO, Elina Anckar. If you wish to ask questions, you can use the chat function on the webcast platform to type in your questions during the presentation or after that. Warm welcome to everybody, and Tiina, please go ahead.
Thank you, Anna. Good afternoon, everyone also on my behalf. It's my pleasure to walk you through our half-year financial report. Let's get started. How did we do in the second quarter of the year? In spite of the continued challenging market situation, our net sales in the second quarter grew and our operating profit improved. Our net sales actually increased by 2% to EUR 44.5 million, and they were boosted in particular by increased retail sales, both in Finland and internationally. The positive development of our retail sales in this weak and unstable general economic environment really reflects not only our long-term work to build our brand and our brand desirability, but equally the resilience and agility of our company. On the other hand, as anticipated, our net sales development was weakened by non-recurring promotional deliveries in Finnish wholesale sales, being considerably lower than in the strong comparison period.
Our comparable operating profit totaled EUR 6.5 million, equaling 14.6% of net sales, and it was boosted by our increased net sales and improved relative sales margin, while on the other hand, higher fixed costs had a negative impact on operating profit. All in all, looking at the second quarter and the first half of the year, our strong financial position paired with the sustained positive development of our business give us an excellent opportunity to continue on our journey to scale up Marimekko, as well as make strategic growth investments to reinforce our competitiveness in spite of the weaker macro environment. A great example of one of these growth investments we actually just announced after the review period earlier this week, namely our plan to open our first-ever Paris flagship store this fall to really fuel our ecosystem more widely all around the world.
Let's have a closer look into the net sales and operating profit development. As mentioned, our second quarter net sales increased by 2% and totaled EUR 44.5 million, boosted in particular by increased retail sales, both in Finland and internationally. The retail sales in Finland grew by 4%, and we had very nice retail sales growth in the international markets, namely 14%. Thanks to the good development of retail sales in Finland, our net sales in Finland also grew by 3%. As estimated, these domestic non-recurring promotional deliveries in Finnish wholesale were significantly below the strong comparison period, but even with that, actually our wholesale sales in Finland decreased only by 2%.
In our company's second largest market in the Asia-Pacific region, our wholesale sales were on par with the comparison period, but the net sales decreased in particular due to licensing income, which was not recorded during the period under review. In total, our international net sales grew by 1%, even with the licensing income decreasing significantly as previously estimated. Looking at the first half of year development, in total, our net sales grew by 3%, boosted especially by increased wholesale sales in Europe and the growth of retail sales in Finland. All in all, our net sales in Finland were on par with the previous year as the good development in the retail sales continued. Of course, the net sales were weakened again by these non-recurring promotional deliveries in the Finnish wholesale sales being below significantly compared to the strong comparison period.
Our international sales grew by 7% thanks to the omnichannel retail sales increasing nearly in all market areas and wholesale sales in all international market areas. Our wholesale sales also increased in the Asia-Pacific region, but this year, the region's net sales have been significantly impacted by the absence of licensing income following the two record years. When we review the development of the early part of the year in the Asia-Pacific region, in addition to the globally prevailing highly uncertain macro environment, it is also good to remember that in the comparison period in the spring of 2024, we had also a lot of special events in Asia celebrating the anniversary of Unikko, our most iconic print. When we look at our net sales development and breakdown by market area and by product line, first of all, our international sales grew by 7% in the first six months.
In the split by market area, there are no major changes compared to the comparison period. In the net sales by product line, again in the split, no major changes, but when we look at the kind of growth rates of the different product lines, we saw the strongest growth actually in the fashion category. Also, our omnichannel store network developed further. I mean, continuously we evaluate our store network and develop it as well as our store experience, maybe in the physical space or in the online. Today, the Asia-Pacific region has already the greatest number of Marimekko stores, and the online store serves customers in 39 countries.
At the end of the review period, there were 171 Marimekko stores around the world, and during Q2, three new Marimekko stores were opened, namely in Osaka, in Japan, in Kuala Lumpur, in Malaysia, as well as an outlet store opened in Espoo in Finland. In the digital space, during the second quarter, we opened a company-operated online store in New Zealand, and towards the end of the second quarter, we also launched a new German-language version of our online store. In the first six months of the year, our brand sales amounted to EUR 187 million, pretty much on the same level as in the previous year. During the half-year period, 67% of our brand sales came outside of our home market, Finland. We move on to our profitability.
Our comparable operating profit in the second quarter improved by 2%, landed at EUR 6.3 million, the operating profit, and the comparable numbers, so the comparable operating profit totaled EUR 6.5 million, equaling 14.6% of net sales. This is a very, very good level of relative profitability, also considering the context of the macro environment. When we look at the drivers behind, of course, the increased net sales and improved relative sales margin supported the operating profit, while, on the other hand, the higher fixed costs had a negative impact on the operating profit. Our relative sales margin was strengthened by margins per product being at a good level, while higher discounts and unrealized exchange rate differences negatively affected the relative sales margin. When it comes to the drivers of our fixed cost growth, there are a few reasons.
One is our investments in digital development to boost our competitiveness, but also due to increased personnel expenses, we saw increasing fixed costs, and the reasons behind that are the investment in the retail store personnel to support retail growth, as well as general pay increases in different markets. Also, the cumulative operating profit in the first six months of the year is at a good level. The operating profit was EUR 10.6 million, while the comparable number, comparable operating profit, totaled EUR 10.9 million, equaling 13% of net sales. It was decreased by a weakened relative sales margin and higher fixed costs, while increased sales supported the operating profit. Our relative sales margin in the first six months of the year was negatively impacted, especially by higher discounts and, as estimated, by significantly lower licensing income, as well as by these unrealized exchange rate differences.
On the other hand, the relative sales margin was supported by margins, the product margins being at a good level. Fixed costs grew in particular due to the increased personnel expenses. The drivers were the same as in the second quarter, and also due to the investments in the digital development. Moving on to the key events in the second quarter, there were many very colorful Marimekko events and activities during the springtime that really brought joy and delighted our customer communities around the world. First of all, our omnichannel Marimekko store network grew and developed further, and here you can actually see some pictures of the three new Marimekko stores, which were in Osaka, in Kuala Lumpur, and in Espoo. In addition to those, we also had eight pop-ups that were opened, and those were mostly located in Asia.
We also launched the limited edition collaboration collection with Crocs, that really ignited widespread interest among the customers around the world, with many of the styles fast selling out. The rationale with the brand collaborations is, of course, first and foremost, to increase and grow our international brand awareness and attract new customers to our brand. We also had a beautiful collaboration with Blue Bottle Coffee that brought Marimekko prints to 10 different key cities in the U.S., as well as in Asia. This is a great example of how we can deepen the relationship with our existing customers at the same time as, in a more targeted manner, we increase our awareness in the key growth areas of our company and brand.
Looking into the future, in June, at the 3 Days of Design event in Copenhagen, we gave a first look together with Marimekko to our limited edition furniture collaboration collection that will be coming to the market later on. April saw the global and probably most important design event, namely the Milan Design Week. As normal, we also produced a beautiful installation to showcase our design philosophy and vision and novelties. This year, we presented a capsule collection created by Marimekko and an artist and influencer, Laila Gohar, featuring Maija Isola's prints, and gained considerable attention and significant media visibility of this installation that represented a gigantic bed. Actually, many of the media outlets referred to this installation as one of the must-see key events during the design week.
As goes to our tradition, in May, we celebrated the opening of the summer season at the Marimekko Day, together with our communities. This year, we got record audiences to admire our publicly open for all summer fashion shows, and we complemented the fashion shows with events and activities held all around the world. We also did pride collaborations with artists that brought joy and color to three of our key cities, so Bangkok, Helsinki, and New York. Moving on to the outlook of 2025.
First, in general, of course, there are still significant uncertainties related to the development of the global economy, such as the tensions related to the geopolitics and trade relations, and the indirect impacts of these tensions and other uncertainties, as well as the increasing tariffs on the general economic situation may be reflected in the consumer confidence, purchasing power, and behavior, and as a result, can have a weakening impact on Marimekko. Of course, we are at all times closely monitoring the development of all the moving situations around the world, and we adjust our operations and plans if and when needed. A few words about seasonality. As typical due to the seasonal nature of our business, a major portion of our company's euro-denominated net sales and operating result are traditionally generated during the first half of the year.
What is also good to remember is that overall, the timing between quarters of the non-recurring promotional deliveries in the Finnish wholesale sales and their size typically vary on an annual basis. Something that we reiterate also today, what we have also mentioned earlier on, is that the licensing income in 2025 is forecasted to be significantly below the previous year's record level. Moving on to net sales development, starting from Finland, our strong home market. Despite the weak market situation, net sales in Finland are expected to be approximately at the level of the previous year or increase slightly. Of course, in Finland, the sales are impacted this year by the weak general economy and low consumer confidence, as well as the overall development of purchasing power and behavior. In addition, the tactical operating environment continues to have an impact on business.
What is good to remember is that since the beginning of the year, we have communicated that in 2025, the non-recurring promotional deliveries in wholesale sales are expected to be significantly lower than in the comparable year and weighted clearly in the second half of the year. In the international markets, we estimate our international sales to grow in 2025. We also estimate the net sales in the Asia-Pacific region, our second largest market, to increase in 2025. The aim this year is to open around 10- 15 new Marimekko stores and shopping shops, and most of these planned openings will be in Asia, as also in many of the previous years. A few words still about growth investments and costs. We, of course, develop our business with a long-term view, and we aim to continue scaling our profitable growth in the upcoming years.
Fixed costs are expected to be up on the previous, so are also marketing expected to increase. What is now good to note, as it pertains to the increasing tariffs in the U.S., they have a direct impact only on a small part of our business, as the entire North American market accounted for 6% of our net sales in 2024. Based on the information that exists today, the increases in tariffs are estimated to increase the procurement costs of the Marimekko products sold in the U.S. market, but we have, of course, initiated diverse measures to mitigate the negative impacts of the tariffs. What is also good to remember is that the early commitment to product orders from supplier partners weakens our company's ability to optimize product orders or respond to any rapid changes in the demand and supply environment, which also can increase risk.
This also hampers responding to the increasing tariffs in the U.S. There are, of course, still also uncertainties related to the global production and logistic chains, but we work actively on various ways to ensure a functioning production and logistic chain to mitigate the increased costs and other negative impacts to avoid delays and to enhance inventory management. Today, we reiterate our financial guidance for 2025, and we expect our net sales in 2025 to grow from the previous year, and our comparable operating profit margin is estimated to be approximately 16%- 19%. The rapid changes and uncertainties in the global trade policy, the development of consumer confidence and purchasing power in our main markets, as well as the possible disruptions in global supply chains, among others, cause volatility to the outlook for 2025.
With these words, I would like to thank you for listening, and we open up for questions, and I would like to invite both Anna and Elina here with me on the stage.
Thank you, Tiina. We've already received quite a lot of questions. Thank you for those, but you still have time to type in more questions if you have those. Let's start with some sales-related questions. First of all, Scandinavia. We saw great growth figures in the first quarter, smaller growth figures now in Q2. What are the reasons behind there, and is there something that you can tell? How should people look at the full year in Scandinavia?
Overall, when we look at Scandinavia, what is good to note is that actually the Scandinavian market grew by 16% cumulatively in the first six months. The development of omnichannel retail, I think, is really truly a testament for the long-term development of our brand desirability paired with this agility and resilience of our company. What is also good to note is that when it comes to the wholesale sales development, actually cumulatively, we grew nearly double digits, so 9%. When it comes to wholesale sales, it's good to remember that it is characteristic of wholesale sales sometimes to have seasonal or quarterly variation. Overall, we do see still very much excellent opportunities for us to also further grow our wholesale business in Scandinavia.
Is it wrong to say that, for example, cold summer or something like that would have impact in our sales in Nordics overall, or does the weather play any role?
Of course, in general speaking, in retail and in our line of business, even weather can sometimes have an impact, but I think that like here, when we look at the very strong retail figures, I have to say I'm very happy with those.
In Q1, you discussed the Canadian market, new partner, new online store. How is the business doing there?
This is, of course, a very fresh new step that we took. This was in March, at the end of the first quarter. We actually adopted a new partner model in Canada. This loose franchise business model is the model that we also use in Asia, so we're very familiar with this. As a first step, together with the new partner, we opened, or the partner opened, the revamped Marimekko online store this spring. The ambition with this partnership is now, in the longer run, to overall further develop the omnichannel sales ecosystem in Canada and capture the opportunities that we see in that market.
In your presentation, you mentioned a lot of reasons behind the development in Asia-Pacific in Q1, Q2, and H1. How should one look at the rest of the year? Are there some market-related developments that investors should be aware of, and how are you confident to keep the guidance of increased net sales for 2025?
As I just actually mentioned when walking through the market outlook, we estimate our net sales in the Asia-Pacific region to grow in 2025. When it comes to the cumulative development of the net sales in the Asia-Pacific region in the first six months of the year, the major reason why we haven't seen growth is actually licensing income, because no licensing income has been actually recorded in the Asia-Pacific region in the first six months of the year. Many of you might remember that actually in the early part of the year, in total, overall, we guided and mentioned that the licensing income in 2025 overall is expected to be significantly below last year's record levels.
When it comes to the wholesale sales, that has been increasing on a cumulative first six months of the year, and the retail sales in Asia-Pacific, which actually includes our stores and online store in Australia, as well as the company-led digital commerce in China, has been flat versus last year. What is also good to remember is that, of course, the general macro environment in the world, as we all know, has been quite unstable. Last year, in the first half of the year, there were quite a lot of activities around the Unikko anniversary in different markets in Asia. Asia continues to be the most important geographical kind of region for our future international growth, and we're very excited to develop that further.
You mentioned the licensing income. How should one look at this year's licensing income compared to maybe future expectations? Is this the new normal, or should we expect licensing income to increase in the coming years going forward? What's the strategy with the licensing?
Before 2025, we had two kind of record-level years in licensing income. When we look, this year, of course, as mentioned, we have said since the beginning of the year that the licensing income in 2025 is estimated to be significantly below the record level of last year. When we look at licensing and its role for Marimekko, we can split licensing into two streams. One is the more traditional licensing stream, basically products that complement our lifestyle concept or products that require a lot of localization. Those kind of products, licensing income streams, are typically more balanced because it's something that is a continuous part of the business. The other stream in licensing is brand collaborations, and those are based on individual contracts. They can be different kinds of contracts, and there can also be even seasonal or annual fluctuations when it comes to that stream.
All in all, brand collaborations and licensing are the third component of our distribution strategy, and they serve first and foremost the purpose of enabling us to increase our global brand awareness that supports our core distribution and scale-up strategy. There's no changes in that, so we're also excited to develop this stream further.
We should expect these global collaborations going forward as well.
Yes, that's part of our strategy.
Yeah. A couple of questions about the costs. Marimekko guides that marketing costs will increase this year. Looking at the first half of the year, they actually declined slightly. Is there something bigger planned for H2, or what's happening in marketing costs?
I would say it's just a natural sort of phasing off certain campaigns, so nothing particular to be mentioned, but as Anna said, we're expecting them to grow.
Okay.
Grow, and then, of course, the H2 is, like, in terms of the turnover and the profit, the larger part of the year.
Maybe if you continue, Elina, with net working capital.
Yeah.
It increased clearly in the first six months. Do you expect a release in networking capital in the second half of the year, or will it remain on a higher level throughout the rest of the year?
Yeah, okay. If we look at the networking capital at the end of the H1, there are certain two factors which are related more to the payment rhythm. Regarding the open receivables for the consumer, I mean the customers, that has increased versus last year. That is linked to a timing issue, so we don't see any particular change in customer profile or payment terms. That is a timing issue. Regarding the incoming funds, like the open payables, they are lower than the year before. That is just linked to the delivery rhythm from the incoming goods, nothing specific. Maybe a couple of words about the inventory. The increase of the inventory mostly took place actually during the first quarter, so we didn't see a significant change there during the second quarter. Naturally, as we are a growth company, euro value needs to increase, of course.
On top of that, we have taken contingency measures to actually ensure that we will have the continuous collection products available if anything happens in the supply chain during these volatile times.
You actually already answered then. We had a couple of questions about inventory, but there's the answers, except for one small detail. Is some of the growth linked to the new Paris opening and the pop-ups discussed in the interim report, or is it more sort of overall? Do these smaller things affect?
I would say that, of course, when we are doing our, so to say, sales planning or inventory planning, we do have all kinds of estimations of possible store openings, but that is not the major reason there. It's amongst other things there.
What expectations are there for the Paris flagship store? Should it already be seen in the figures this year? Going forward, are flagship stores typically, sort of how long does it take for them to break even?
On a kind of strategic level, the reason why the Paris flagship store plays quite an important role is because of the role of Paris in the world of fashion. Paris is one of the most important cities in the fashion world, and for us to have a flagship store there allows us to further reinforce our positioning and global awareness. This store helps us fuel the ecosystem of also other channels. Because of the role that Paris plays in the global fashion industry, we believe that there are eco impacts of the store not only felt in Europe, but actually more widely in Asia and the U.S.
Okay. Thank you, Tiina and Elina. Those were all the questions we had this time. Thank you for joining us, and we look forward to seeing you also in our next quarterly webcast in October.