Good afternoon. My name is Anna Tuominen, and I am the IRO of Marimekko, and it is my pleasure to welcome you to our second quarter results webcast. Before we begin, just a few practicalities. At the end of the session, we will have some time for questions- and- answers, and you can use the chat function on the web platform to pose your questions already during the presentations. We will take them at the end. With me, I have our President and CEO, Tiina Alahuhta-Kasko. In a short while, Tiina will go through our Q2 results, and after that, our CFO, Elina Anckar, will join us for the Q&A session. Tiina, please go ahead.
Thank you, Anna, and good afternoon, everybody. It is my pleasure to walk you through our half-year financial report. Let us get started. When it comes to our second quarter, our net sales were nearly at previous year's record level, driven by strong growth in the APAC region. Our operating profit was behind the comparison period. Overall, our net sales in the second quarter landed at EUR 43.9 million. The operating environment continued as uncertain due to the geopolitical and trade policy tensions, which reflects in consumer confidence in many countries. Net sales were weakened by a decrease in our domestic retail sales in a challenging market situation due to certain sales campaigns performing weaker than expected. On the other hand, our net sales were boosted by the excellent development of our retail sales in all international market areas. In total, our international sales increased by 7%.
The strongest growth came from the Asia-Pacific region. Net sales in Finland decreased by 7% due to the retail sales declining. As to our profitability, our comparable operating profit totaled EUR 5.1 million, equaling to 11.7% of net sales, and our operating profit was weakened, in particular, by increased fixed cost. Our cash flow from operating activities improved, and our financial position remained strong. Cumulatively, when we look at the first half of the year 2026, our net sales increased by 2%, driven by growth in international sales, and our comparable operating profit margin was at the good level at 12.2%. Today, we also reiterated our financial guidance for the full-year. Now we enter the fall season at Marimekko with full determination, and energetically continue our work towards scaling the Marimekko phenomenon around the world. Let us look at the drivers behind the second quarter and half-year results.
Starting from the net sales in the second quarter, as mentioned, our net sales were nearly at the record level of the comparison period, amounting to EUR 43.9 million. Net sales in Finland decreased by the 7% when retail sales declined in the challenging market situation due to certain sales campaigns performing weaker than expected. On the other hand, our domestic wholesale sales actually increased, partly supported by non-recurring promotional deliveries. It is good to remember that despite the recent positive development of the Finnish export industry, the consumer confidence in Finland is still at a weak level, although it improved slightly towards the end of the second quarter, which in itself is, of course, promising. When looking at our company's second biggest market area, the Asia-Pacific region, our net sales grew by a nice 16%, as both retail and wholesale sales increased.
Then in total, our international net sales grew by 7%, as retail sales increased in all international market areas. Moving on to the first half of the year, our net sales increased by 2% to EUR 85.3 million, being boosted in particular by the growth in retail sales in the APAC region and other international market areas. In Finland, our net sales decreased by 4%, due the retail sales declining in this price-sensitive and tactical operating environment. But again, on the other hand, our wholesale sales in Finland increased, partly supported by domestic non-recurring promotional deliveries. In our second-largest market area, the APAC region, our net sales strengthened by 7%, with retail sales in particular developing well. And as our retail sales developed well also in other international market areas, in addition to the APAC region, namely in total by 20%, then also our total international sales increased by 8%.
So nice development in the international markets for Marimekko. When we look at the split of our net sales by market area, no major changes in the first half of the year. The share of Finland decreased a little bit, while at the same time, the shares of our total net sales of the different international markets then increased. There are no major changes in the net sales by product line split. In the second quarter, our omnichannel store network grew in Asia when six new stores were opened, and three pop-up stores were converted into permanent stores. Today, a total of 183 Marimekko stores, physical stores serve customers around the world, while our online store serves already in 39 countries.
Then when we look at our brand sales, which represent the reach of the Marimekko brand through different distribution channels, our brand sales totaled EUR 168.1 million, and 64% of our brand sales came from outside of our home market in the first half of the year. Moving on then to our profitability. So in the second quarter, our comparable operating profit was behind the comparison period, totaling EUR 5.1 million, which equals to 11.7% of net sales. In particular, the increased fixed costs weakened the operating profit.
Also, the decrease in net sales had a negative impact, while then on the other hand, the improved relative sales margin had a positive impact on our operating profit development. Our fixed cost in the second quarter increased due to the growth in personal expenses, driven by, in particular, general pay increases in different markets, as well as then due to higher marketing costs.
Our relative sales margin was then again improved by unrealized exchange rate differences and lower logistic costs. Cumulatively, our operating profits is at the good level, at EUR 10.4 million, equaling to 12.2% of net sales when we look at the comparable operating profit margin. Our operating profit was weakened by these increased fixed costs, while then on the other hand, improved relative sales margin and an increase in net sales affected positively. The fixed costs, similarly as to the second quarter, had similar drivers. First of all, the marketing costs had significant growth, and then personal expenses also increased, driven in particular by general pay increases in different markets. Relative sales margin then again strengthened by unrealized exchange rate differences, lower logistic costs, and increased licensing income. On the other hand, then higher discount costs were weakening the relative sales margin.
There was an abundance of colorful events in Marimekko's second quarter of 2026. First of all, we did reach a very special milestone in the second quarter when we opened so many new stores in the APAC region. Today, there are a total of 102 Marimekko stores in this region. As mentioned, six entirely new stores were opened in Asia during the second quarter. Three pop-up stores were converted into permanent stores, and then also two pop-up stores delighted our customers, both existing and new. During the review period, we launched in a completely new market in the Philippines, when three smaller shop-in-shops opened in three department stores. After the review period, we opened another new market for Marimekko, namely Indonesia, where two of the first shop-in-shops opened their doors. Naturally, these new market launches further reinforce our presence in the dynamic markets of Southeast Asia.
The second quarter also saw the important Milan Design Week, which is probably the most important industry event in the field of design. The Osteria Fiori di Marimekko lifestyle experience and our new designs and also classic designs really attracted attention during this week, both among visitors and international media. Many of you might already know that we have a tradition of well over 30 years of kicking off the summer and celebrating our new summer collections with everybody through the Marimekko Day activities. This year, the Marimekko Day was celebrated through a roster of the classic fashion shows in the Esplanade park here in Helsinki, but also an event in Tokyo. A roster of other customer events and activations also took place in the second quarter in Bangkok, Taipei, Helsinki, Paris, and New York, and this way, boosting our brand visibility in these key markets.
Overall, different kind of creative events and experiences play a really important role to build Marimekko's cultural relevance and sort of build this Marimekko universe, this way strengthening our customer relationship and our brand equity. We also had bright artist collaborations coloring several of our key cities, Helsinki, New York, and Paris in the second quarter. Moving on then to our outlook in 2026. First a few words in general. Of course, it's clear that there are still significant uncertainties related to the development of the global economy, such as the tensions related to geopolitics and trade relations, the war in Ukraine, the 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, various disruptions in production and logistic chains, as well as changes in these chains caused by uncertainties may also have a negative impact. But as always, we are monitoring the situations and adjust our operations and plans if necessary, accordingly. A few words about seasonality. Due to the seasonal nature of our business, a major portion of our company's EUR-denominated net sales and operating profit and operating result are traditionally generated during the second half of the year. The timing between the quarters of the non-recurring promotional deliveries in Finnish wholesalers and their size typically vary on an annual basis. Today, we have also now updated the outlook for our licensing income for 2026, and today we forecast it to grow from the previous year. As to our net sales development, a few words of our key markets.
First of all, starting from our home market, Finland. Due to the uncertainties in the market environment, our net sales in Finland in 2026 are expected to be approximately at the level of the previous year or decrease slightly. Sales in Finland are impacted by the uncertain general economy, as well as the development of consumer confidence, purchasing power, and behavior. While there are indeed early signs of general economic recovery, the operating environment in Finland has remained tactical and price sensitive, and consumer confidence continues to be weak, which can have an impact on the business. In 2026, the non-recurring promotional deliveries in wholesalers are expected to grow from the comparable year and be weighted in the second half of the year. In the international front, overall, we estimate our international sales to grow in 2026.
We also estimate our net sales in the APAC region, our second-largest market area, to increase in 2026. Our aim this year is to open approximately 10- 15 new Marimekko stores and shop-in-shops this year, and most of these planned openings will be in Asia. Moving on to the growth investments and costs. We, of course, develop our business with a long-term view and aim to continue scaling our profitable growth in the upcoming years. In 2026, our fixed costs are expected to be up compared to the previous year. Of course, also the general cost inflation continues to also affect Marimekko in 2026, and our marketing expenses are expected to grow.
What is also good to note is that the early commitments to product orders from partner suppliers weaken our ability to optimize product orders and respond to rapid changes in demand and supply environment, and thus increases business risk. There are also uncertainties related to global production and logistic chains, which can, for example, increase costs or cause delays, and this way have a negative impact on our sales and profitability. The ongoing war in Ukraine may, especially if prolonged, increase production logistic costs. But again, as always, we work actively in various ways to ensure competitive and functioning production logistic chains to mitigate the increased costs and other negative impacts, as well as to avoid delays and enhance inventory management.
Today, we reiterate our financial guidance for 2026, and we expect our net sales in 2026 to grow from the previous year, and our comparable operating profit margin is estimated to be approximately 16%-19%. The development of the consumer confidence and purchasing power in our main markets, in particular, cause significant volatility to the outlook. This development is, of course, 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. This morning, Marimekko's board of directors announced new medium financial goals for Marimekko, targeting strong profitability by scaling growth. At Marimekko overall, we believe that the winning brands of the future are determined in the more challenging market conditions.
The long-term financial goals that our board set some years ago are unchanged, and they provide us with clear longer-term direction. Given the current challenging operating environment, our board of directors has today decided to set new medium three to five years financial goals under which our aim is to achieve annual net sales growth of 10%. The core goal for the comparable operating profit margin remains 20% also in the medium term. Finally, overall, we believe that Marimekko's original lifestyle brand, which resonates with a wide consumer base, paired with our strong financial position, provides us an excellent foundation to continue our consistent work and investments in growth, both in Finland and in international markets. With these words, I will say thank you for listening, and we can open up for questions.
Thank you, Tiina. I would like to invite Elina Anckar to join us as well. You have posted a lot of questions. That is really nice, and you can still use the remaining time to post more questions if you would like to. Maybe a few questions about the Q2 sales first. About the North American sales. Some companies are reporting already increased sales in that market altogether. Marimekko had a double-folded picture with retail sales developing well but wholesale sales being a bit down. Can you walk us through this, or are there some learnings from this for the remaining of the year or
Yeah, of course. When it comes to North America, of course, starting from the omnichannel retail sales, we are of course very happy that our long-term efforts show in continued nice retail sales development. Our retail sales in North America increased by 8% in the second quarter. When it comes to the wholesale sales, it is important to remember that in wholesale sales, it is typical to have sometimes variation or fluctuation between different quarters based on the kind of ordering rhythm of different wholesale clients. I think that here it is good to remember that when we look at the first half of the year in wholesale sales, we actually saw some nice growth also in North America.
Yeah. What about then APAC? Is it possible to quantify how much of the growth came from new markets, new openings, or where is this old one?
Sure. Overall, when we look at the second quarter, APAC, again, very nice development with 16% net sales growth. The growth in APAC in the second quarter was driven by the very strong development of retail sales, namely 43% retail sales growth. At the same time, the wholesale grew by 6%. When we think about what are included in our retail sales numbers in APAC region, we include in that number our Australia omni-channel retail, both physical stores and online stores, and also the China online sales. The question was also asking about the role of new market openings.
As I mentioned in my presentation, in Philippines, where we actually launched in the second quarter, we opened the first small three shop-in-shops. Of course, these are first small steps that allow us to start learning from this very interesting market in the longer term. In that sense, these are still smaller steps. Holistically speaking, understanding also the volatilities and uncertainties in the world, we're very happy with the performance both in retail and in wholesale in the APAC region.
Yeah. Regarding Q2, there's a question around inventory. Inventory was slightly up. How comfortable are you with this level ahead of H2?
Okay. Actually, if we look at the end of the H2 situation versus the last year, the inventory was a little bit down compared to last year. In terms of inventory, of course, it's super important for us that we make sure that we have the inventory, what is needed for the growth in terms of the quantity, but also in terms of the content of the inventory. At the same time, ensuring that it's optimal from the quantity point of view as well.
There's a few questions related to the outlook in the Finnish market going forward. The outlook today was rephrased to be approximately previous year's level or slightly below. Is the outlook for the second half now weaker than before, or was the weak sales more isolated in Q2? Is one question. Another way of putting it round is, as it was already down 4% year-on-year, what gives you the confidence of giving this guidance of stable year-on-year on full-year level? Do you see any signs of improvement in the overall market in H2?
Of course, as I mentioned, the positive news that we have been reading on the export industry development in Finland and the slight uptick on the consumer confidence towards the end of the second quarter. Of course, this is positive. Of course, we hope that will continue.
But the underlying trend has been there for quite a long time.
Yes.
It's not a Q2 specific thing.
No. And I think that is also really important to remember that the consumer confidence in Finland has been weak for a longer time. Even though it improved, it is still at the weak level. Of course, we hope to see, like everybody, I am sure, that the positive news overall in the export industries and so forth, that they will start translating also to the consumer confidence in a stronger manner. I think that overall, when we look at sales in Finland, they are impacted in 2026 by the uncertain general economy, as well as the development of consumer confidence, purchasing power, and behavior.
Something good to remember when it comes to the second quarter of the year in Finland is exactly these non-recurring promotional deliveries. We have communicated that in 2026, these non-recurring promotional deliveries in wholesale sales in Finland are expected to grow from the previous year and are expected to be weighted to the second half of the year.
Yeah. Another question related to the full-year outlook or the market outlook. Licensing income outlook was upgraded. What has changed since the last time we spoke?
Yeah. Short and sweet. The outlook when it comes to licensing income in 2026 has improved.
Yeah. Marimekko recently appointed a new COO. The question here is that with the new COO in place, where do you see digital data and AI playing a bigger role in making Marimekko more agile? Maybe just to correct that this role is COO of supply chain, but I think the question of digital data and AI in Marimekko going forward is still very important question. Actually, the person asking is also asking that does the expansion in Asia also change what we need in digital ecosystems or capabilities?
This is a very good and actually big question. I am sure that also our Chief Technology Officer and people from the team would be happy to have a couple of hours lecture on this topic. It is a very exciting topic. Overall, I think that what we can also see is that also because of this more challenging market situation and uncertain market situation, we need to be even more creative and even more agile. We do see that, for example, the use of AI and new technologies give us even better tools to develop that. Both from an efficiency point of view but equally to support growth acceleration.
At Marimekko, we have a very strong technology team. But of course, when it comes to the AI use and technological development, this is a whole organizational initiative. Of course, we are eager to capture the opportunities that new technologies provide for us in the future. Like today and in the future. Then there was also the question about whether there might be some special, different kind of needs from a technological digital capability or ecosystem point of view in Asia. So, it is interesting because when we look at the different markets in Asia, also the online shopping ecosystems do vary. For example, as we know in China, the online business happens in platforms such as Tmall and JD.com and so forth. But whereas, for example, in Korea, it is again different platforms.
I think here the key really is that we, in all markets, take the position of the target consumer in the way that we approach the market and develop the different channels. We always need to serve the customers in the channels that are relevant for our target customer in each particular market. This really requires this understanding with boots on the ground thinking so that we are relevant. Of course, for example, if you think about the Chinese market or the South Korean market as an example, they are extremely advanced digital market. We can also learn a lot and utilize some of those learnings on this part of the planet.
Yeah. Thank you. What about the new Southeast Asia openings? We mentioned in the presentation that there are a few shopping shops at the moment. Are there primary more brand-building opportunity, or can it become a meaningful sales contributor over medium term?
Some of you might remember that as part of our Asia growth strategy, we already have quite nice presence built up in many of the Southeast Asian markets. For example, Thailand and Singapore, and we have already started to also take steps some years ago in Vietnam and Malaysia. It is a very natural step for us now to start building our brand story little by little, also in Indonesia and in the Philippines. We rather see Indonesia and Philippines as an opportunity to start building our story gradually in the longer term. Now we are taking the first steps to start to learn of the market together with our partners. Overall, this way we can reinforce further our Southeast Asia ecosystem.
Good. The midterm financial goals that were published today, maybe Elina, could you walk through us some building blocks on how to reach this 10% sales growth target in three to five years?
Yes. Thank you for an excellent question. As even if new midterm targets were introduced, our strategy hasn't changed, so that is good to remember. If talking about the building blocks where we then going to get that growth is first of all, it's of course our omnichannel retail, which then covers our own stores, but then also partner-led stores. International growth being there, the Asia being the growth-driving region. We cannot forget Finland. We are definitely here seeking for market share growth as wel l.
Also new customers and different other channels like in wholesale channels, e-tailers, department stores. At the same time, it's good to remember that because we can also think of the licensing opportunities and brand awareness building through the brand collabs. So we are gaining there also the awareness, but also some income. There is also a possibility for us to add some product groups for the palette as well.
Maybe bit as a follow-up to that. Looking back past three years, both in Finland and internationally, the sales growth has been less than 10% overall. What makes you believe that you can reach this 10% growth in the coming years? Are there some market recovery assumptions behind it, or is it totally something that can be done even if the market stays as it is?
I think that, first of all, today when our board announced these new medium-term financial targets, our chair, Mika, also shared that, of course, these great uncertainties in the global macro environment caused by the geopolitical tensions and trade policy tensions, those have had an impact on the consumer confidence across markets, and especially in Finland, our important home market, which has also impacted our overall net sales development. At the same time, I'm very proud, and he also mentioned that in the release, that we're very proud of the progress that we have already made in our scale strategy. Despite all these uncertainties that we have seen in the world and in the operating environment, and also really affecting our industry, in Finland and in the international, we have been developing well in the past years, also in the Finnish market.
We, of course, are here to develop Marimekko in the long term, and the fact that the continued positive development of our business, paired with the very strong financial position also allow us the excellent possibility to continue making these investments, strengthening, further reinforcing our competitiveness in the long term. We actually believe that this is a great advantage.
As the midterm growth target is slightly lower than the long-term growth target, does it mean that there's less cost increases, less need for investments for growth than in the midterm?
No. When it comes to these targets, we have now defined that the medium-term targets are for three to five years. The long-term targets really provide us good longer-term direction, and again, the board set these new targets given the current challenging operating environment. I think that here, when it comes to increasing profitability, the key driver of that in our strategy is scaling up top-line growth. That is the key lever, and as Elina Anckar mentioned, our scale strategy is intact. We follow the same good strategy and continue to progress on that journey.
One of the key points in scale strategy is the sharpened creative vision and all the time developing our collections. There's a very specific question that, could Marimekko consider a small male-dedicated line of clothing going forward?
Thank you for that question and also feedback. This is something that we are increasingly getting questions about, so it's definitely something that at some point in time we need to consider. Of course, today, we already have our Marimekko Kioski more unisex line, and we have also through that, as well as our accessories and home decoration lines, gotten also new male customers. However, when it comes to the ready-to-wear collection, today we are firmly focusing on the womenswear, and this is purely because of the fact that we very much believe that strategically, in order to succeed, we also need to have a clear focus.
Yeah. One final question related to the Finnish outlook for this year. What is the confidence on reaching this new outlook for Finland, even if the underlying market would not improve at all?
Our market outlook is always based on management's best estimate and judgment. This is what we believe in and what we're working on, and I think that overall, looking at Marimekko, we are a creative company. We use creativity also, not only in the obvious, in the design and in the creative marketing and brand, but equally actually to mitigate the challenging market circumstances and come up with newfound agility in our ways of working. This is what we're focusing on.
Thank you. That was all the questions we had today. We are so happy that you took the time to join us, and we hope to see you with our Q3 results as well. Thank you.
Thank you.