Good afternoon, ladies and gentlemen, and Welcome to Marimekko's Result Webcast. My name is Anna Tuominen, and I'm the IRO of Marimekko. In a short while, our President and CEO, Tiina Alahuhta-Kasko, will walk you through our second quarter and half-year results. After that, we've reserved some time for your questions. You can type in your questions using the chat function of the webcast platform. Now, Tiina, please go ahead.
Thank you, Anna, and good afternoon also on my behalf. It's my pleasure and joy to be updating you on Marimekko's Q2 and half-year performance. Let's get started. Overall, when looking at the second quarter of the year, Marimekko's strong development continued, and our net sales and operating profit both increased considerably. Our net sales increased by 40%. It's good to remember that in the comparison period, the pandemic had a significant impact on the net sales, especially in Finland, in our home market, where net sales now grew by 61%. Our international sales were up by 20%. In the comparison period, the international sales kept relatively flat. It was only minus 3%. This is good growth on solid numbers. If we then compare to the time pre-pandemic, namely to Q2 2019, Finland net sales grew by 9%, and international sales grew by 16%.
Very happy with the development of our sales across our markets. When we think about the operating environment in the second quarter of this year, nearly all of the Marimekko stores were open and also footfall in the stores grew nicely from the comparison period when we were living at the heart of the first wave of the pandemic, and Marimekko's own stores, as well as many of our partner-operated stores, were temporarily closed for part of the quarter due to the coronavirus pandemic. With the nice increase in the net sales, also our operating profit improved significantly, over doubled, and landed to EUR 5.5 million. Overall, I would say that this continued strong performance puts Marimekko in a good position to continue on our path, investing further for our long-term international growth. Let's have a closer look at the drivers behind the result.
Looking at the net sales, as mentioned, 40% increase to the previous year, driven especially by retail and wholesale sales in Finland, as well as wholesale sales in the Asia-Pacific region and Scandinavia. Something maybe to be noted is that following some campaigns and holidays at the turn of the reporting period, there were some temporary delays of a few days in the deliveries of our online store and some EUR half million in retail sales were exceptionally left unrecognized as revenue for the second quarter. Overall, really a strong, nice development across our key markets. When we look at the half-year performance, net sales grew by 28%, and growth was especially driven by wholesale sales and retail sales development in Finland as well as wholesale sales in the Asia-Pacific region and Scandinavia, as well as increased licensing income from the EMEA region.
The good development in the wholesale sales in the domestic market in Finland was also partly supported by non-recurring promotional deliveries. Something that is also good to note is that the sales growth in the Asia-Pacific region was partly due to the transfer of some of the wholesale deliveries for the final quarter of 2020 to the first quarter of the current year. As you can see, we've seen really nice double-digit growth across all our key market areas. When we look at our net sales development and breakdown per market area as well as by product line, obviously the home market, Finland, still continues to represent approximately half of our net sales, and our second biggest market area, Asia-Pacific region, represents then 21%. There are no significant changes in the breakdown of our net sales base markets.
When we look at the breakdown of net sales by product line, around 55% of the net sales still come from the, let's say, fashion world, meaning our ready-to-wear as well as bags and accessories, and then 45% of our net sales come from the home category. When we look at the growth for the different product lines, what we were very happy to see was a growth across all the product lines driven especially by strong development for home products. Here we can definitely see the strength and beauty of Marimekko's lifestyle concept. Marimekko is said to be one of the first real lifestyle brands in the world, and that position is something that we see as very competitive also looking to the future.
Ready-to-wear represents the spearhead for our lifestyle. The logic obviously for that is that when we are a credible player within the fashion world, then we're able to leverage that credibility across the full lifestyle concept in a strong way. This is something that we can now see here in the results as well. When people have been spending more time in their homes during the pandemic time, this has ignited a trend, which we see a long-term trend, for home decoration. With our strong lifestyle offering, we've been able to capture the growth opportunities in this area as well. When we look at the Marimekko store network, there are in total 154 Marimekko stores around the world, with the greatest number of stores already being located in the Asia-Pacific region. In the review period, a new Marimekko online store opened in Taiwan, operated by our local partner.
Today, the Marimekko online store serves customers in 35 countries already. Our brand sales developed nicely also during the first half a year by 8%, and in the second quarter, a great majority, so 67% of our brand sales came already outside of our home market, Finland. When we have a closer view on our operating profit, so as mentioned already earlier, our result increased substantially during the second quarter and landed to EUR 5.5 million. The comparable operating profit margin in the second quarter was 16.8%, which we can definitely consider a good accomplishment. The improved relative sales margin supported the result and the key drivers behind the stronger relative sales margin included, for example, relatively lower logistic costs, improved margins per product, and smaller discounts. The lower licensing income than in the comparison period then had a weakening effect to the sales margin.
Overall, on the other hand, when we look at our profitability operating profit, an increase in fixed costs had a weakening impact on earnings. The key driver there was the increase in employee benefit expenses. It's good to remember that in the comparison period, due to the pandemic situation, Marimekko carried out extensive temporary layoffs in our retail organization, and in the period under review, the temporary layoffs were significantly smaller. In addition, as we've discussed already in the previous quarters, Marimekko is investing in accelerating our long-term international growth, and this way, investing in the building blocks to fuel this future growth. This then its own part, had an increasing effect to the employee benefit expenses. Also, marketing expenses were higher than in the previous year, and temporary cost savings were lower.
When we look at the half-year operating profit, the comparable operating profit and operating profit grew to EUR 11.1 million, which is almost tripling from the year before. Pretty straightforward drivers behind, naturally, the increased net sales being the key driver for earnings, but also the improved relative sales margin supported our profitability. The fixed cost, on the other hand, had a weakening impact on the result. When we look at some of our key events in the second quarter, obviously it has been a very busy quarter because Marimekko has celebrated our 70th anniversary, like real birthday. Before we get to that, we have had some really exciting announcements during the course of this spring. Mainly in May, we announced our first ever sports apparel collaboration with adidas, really bringing together the art of print and performance.
It goes without saying that this collaboration with adidas provides a fantastic opportunity for Marimekko to introduce our brand to a really wide global audience, even to consumers that are newer to the Marimekko brand. We also announced in May a new collaboration with the Japanese global apparel retailer UNIQLO. This is continuation for our really nice past collaborations, and this collaboration with UNIQLO was also one of UNIQLO's spearhead collaborations for 2021. The main objective when it comes to brand collaborations for Marimekko is naturally to increase our international awareness. In addition to that, these collaborations also provide us licensing income, which is also part of our business model. We really see the collaborations playing a crucial role in supporting our core business through the increased visibility and introduction to the wider audience.
Looking into the 70th anniversary celebrations that really sort of escalated and peaked also during the second quarter when we had the official birthday date. Many of you might know that we have a traditions of decades of organizing big public fashion shows in the heart of Helsinki, in the Esplanade Park every year to celebrate the beginning of summer and celebrate sort of with our customer community. Naturally, this year, again, it was not possible to organize this kind of event, but because inclusivity and equality are important values for Marimekko, we still wanted to find a way how, in these circumstances, we could bring people together and continue this tradition of open fashion events, but now do that in a new, innovative way.
What we then did, we actually organized the world's most inclusive fashion party virtually, where artists from around the globe, from the key markets where we operate, were invited to entertain guests for 12 hours. The program also included some interactive elements. People, for example, had the possibility to try our summer collection virtually and so forth. Overall, we are big believers on the importance of creative retail concepts playing a crucial role as part of the omni-channel customer experience in this new reality. We've been working on this and opportunities on this front for quite some time already, and we were very happy to actually have around 20 Marimekko pop-up stores in our key market areas during the second quarter. The pop-up stores in Asia, namely in Hong Kong, Shanghai, and Tokyo, were really centered around the 70th anniversary.
That was also the case in Australia, where David Jones department store hosted seven Marimekko pop-up stores. In North America, one of the leading department stores, Nordstrom, organized a Pop-In@Nordstrom Welcomes Marimekko campaign that was ongoing for a couple of months in nine different cities in the Nordstrom department stores as well as online. Again, these are fantastic ways for us to widen our reach, introduce our brand to new audiences, and we're able to do this because we have such a unique, recognizable design language, relevant value base that resonates with consumers around the world, and overall wonderful, approachable collections that are relevant for this time. We also, in the second quarter, published our sustainability review. In the past year, we especially worked with more sustainable materials and decreasing the emissions, among other things.
As a result of continuous development work and emission offsetting, our operations also became carbon neutral in 2020. The year 2020 was also the final year of our previous sustainability strategy cycle, which began in 2016. Overall, during this period, we made consistent progress in all the focus areas that we had set for ourselves. As many of you might remember, at the end of last year, we announced our new, even more ambitious sustainability strategy for the upcoming years. It really kind of reflects our ambition to wanting to be at the forefront of developing more sustainable products and practices. Overall, we believe that in the future, timeless and long-lasting products will be made in balance with the environment according to the principles of circular economy and with full transparency starting from raw materials.
Our very long-term vision is that our operations would leave no trace to the environment. Some of the highlights of our sustainability work in 2020 included the collaboration with the Natural Indigo Finland. We're very happy of having had the chance to introduce the first products printed using this blue dye obtained from the woad plant to the stores this summer. These natural dyes really represent one of the multiple ways for us to increase sustainability of our operations. The fact that we have our own printing factory here at the Marimekko House in Herttoniemi offers us the opportunity to take an active role in these kind of research and development initiatives, and through this, also take the whole industry towards a more sustainable future. A few words about our outlook for 2020, just in brief.
Overall, as we know, the coronavirus pandemic has been the worst crisis experienced by the global fashion industry, and it will heavily impact our sector also in 2021. That we can see that the instability caused by the coronavirus pandemic has again clearly increased, but we're closely monitoring the development of the situation in each of our market areas and will adjust our operations and plans according to the situation. When we look at our two main market areas, Finland and Asia-Pacific, we do expect both the sales in Finland as well as the Asia-Pacific region to increase in 2021. Our new store and shop-in-shop opening plan is intact, and the plan is to open approximately five to 10 new Marimekko stores and shop-in-shops in 2021, with most of the planned openings focused in Asia.
Overall, we estimate that both our wholesale sales and retail sales will increase in 2021, and we do expect that the growth is to be particularly strong in wholesale sales, which also includes sales to our partners operating Marimekko stores. The development of overall the coronavirus situation, the vaccine coverage, and possible restrictions or recommendations across market areas, on the other hand then, has an effect on footfall in the stores, and this way also the outlook both in retail and wholesale, including also the non-recurring wholesale promotions that we expect in the second half of the year. We have also experienced some coronavirus-related disruptions in our supply chain, which can then have an impact on the availability of our products and so consequently on net sales and profitability.
Also, the net sales and earnings are essentially dependent on maintaining the operational reliability and efficiency of distribution centers and logistics in these exceptional situations. We are continuing our efforts to control gray exports. In addition, actually, our outlook for licensing income has improved, and we do expect our licensing income to be approximately at the same level as in the previous year. We are planning to accelerate our long-term international growth in 2021, and therefore fixed costs are expected to be up compared to the previous year, especially during the second half of the year. It's also good to remember that fixed costs were indeed reduced by partly temporary cost savings, as well as subsidies granted in different countries to mitigate the negative impacts of the coronavirus pandemic in the previous year.
Marketing expenses are expected to grow and take place, especially in the second half of the year as we continue our efforts to increase our awareness and fuel our future growth. Something also that we would like to highlight here is that the accounting treatment of some cloud-based IT capital expenditure is changing. According to the current preliminary estimate, the change in accounting principles will increase our fixed costs and accordingly lower our company's investment approximately by some EUR 1 million during the financial year of 2021.
We are finalizing the calculations relating to this during the fall this year, and the possible impacts will be accounted for retrospectively, latest at the financial statements in 2021. Finally, because of the seasonal nature of our business, we do estimate that the major portion of the company's euro-denominated net sales and earnings are generated during the last two quarters of the year, as typical is the case in our business. However, the relative development of net sales is expected to slow down during the second half of the year as the coronavirus pandemic had an exceptionally negative effect on the sales during the first six months of 2020.
Our financial guidance is that our group's net sales for 2021 are expected to be higher than in the previous year, and comparable operating profit margin is estimated to be approximately on a par or with, or higher than in the previous year. As mentioned, the instability caused by the coronavirus pandemic in our markets has again increased clearly, and therefore there are significant uncertainties associated with the trend in our net sales and earnings due to this pandemic situation. With these words, I would like to end my presentation and update on Marimekko's second quarter and half year results, and I think the floor is open for questions.
Thank you, Tiina. There's actually quite a few questions.
Okay, great.
The first question relates to the investments in international growth mentioned in the report. Is it possible to give an estimate of what kind of impact these investments will have on personnel costs? Do you have an estimation on when these inputs will start showing in the revenues and results?
It was about the personnel.
Yeah, especially the personnel costs.
Overall, what we have also previously communicated when it comes to the ways that we are fueling our long-term international growth, we believe that by focusing our investments, especially on developing our digitality, seamless online channel experience, brand awareness of sustainability are really key. Also, as mentioned now in this interim report, because of these efforts, also the employee benefit expenses have been increasing. We have done some recruitments that further support us, especially in these areas. When it comes to specifically personnel costs, we haven't opened up or shared more outlook on those. As mentioned, we do expect fixed costs to increase, especially in the second half of the year.
Thank you. There's another question related to the market outlook. The supply chain problems were mentioned in the outlook. Can you elaborate which product groups it's impacting or any more details?
When it comes to the supply chain related disruptions due to the coronavirus pandemic, these have been, in our global industry, quite common issues. Last year, Marimekko's very lucky in the fact that we were very minimally affected by the supply chain related disruptions. This year, we have experienced some disruptions at our partner suppliers due to the coronavirus pandemic, which has then meant a little bit lower than expected capacity because of the aforementioned situation. Naturally, what we do is our teams are very much working on to mitigate these situations. We haven't opened up more to which categories these are related to. These, as I mentioned, are unfortunately quite common issues in our industry today, and in that way, part of our normal way of working and mitigating the coronavirus crisis, and our teams are working on these.
Thank you. There's a few questions related to collaboration with adidas. First of all, several people are interested in the more detailed breakdown of financial impacts between quarters. For example, are there revenues on Q2 or more visible on H2 numbers? How would you describe the success of the campaign? Has it been according to your expectations or even exceeding them?
Maybe I'll start with the latter part of the question. We have been, of course, extremely excited to partner up with adidas. It has been a long-term dream come true marrying the art of print and art of performance via the two brand strengths. We are very happy about this collaboration, and the news was received very positively. When it comes to the other parts of the question, when it comes to licensing income in general, there are different ways, depending on different types of contracts, when the revenues are recognized.
There is quite a lot of variation in these type of contracts, and naturally we cannot open up more specifically any single contract that we have or agreement that we have. When it comes to the adidas partnership altogether, we have announced when we announced the adidas collaboration, that licensing income related to this collaboration has been booked to the first quarter numbers under EMEA licensing.
Thanks. With UNIQLO, you have been collaborating quite many times already. Is this something that we should expect to continue? How should we think about Marimekko's and UNIQLO's future together?
I have to say, I'm really happy about the collaborations that we've done during the course of several seasons and years with UNIQLO. I think that, again, it's a good marriage in the format of a collaboration. The democratic design approach, design made for all from UNIQLO, and then Marimekko's art of printmaking and positive lifestyle philosophy. We definitely have seen how these kind of collaborations have increased our international awareness, and this way also supported Marimekko's core business. When it comes to the future, unfortunately, we are not able to disclose anything about our future plans. What I can say is that we have been very happy about the collaborations with UNIQLO, and the fact that our collaborations have been some of the spearhead collaborations of that company, for example, this year.
Sounds good. What about the collaboration with Nordstrom? Is that something that will last longer, or is this something exclusive with limited time span?
When it comes to the Nordstrom Pop-In@Nordstrom, that initiative that took place in nine cities and online in North America. Nordstrom has this concept of creating, inviting interesting brands and phenomena, and introducing them through these Pop-In concepts. Obviously, we were extremely excited of having been selected to this very visible initiative. We can definitely see that it is very much in line with our overall strategy for North America, which represents one of our key market areas around the world, where wholesale really represents one way for us to reach new audiences and acquire also new customers to our lifestyle brand. Again, unfortunately, when it comes to a single partner or company, I'm not able to disclose more in detail about the future plans. Again, I can really say that this initiative has been something that we're very excited about.
There's also a question related to Marimekko share. Now that the stock price is almost EUR 80, are there any plans to split the stock?
Well, at the moment, we do not have those plans, but thank you for this question.
There's a question related to products. We've touched upon in these webcasts earlier as well, the unisex models and men's wear. A lot of the e-tailers, and retailers as well, are selling unisex models under women's sections. Men would be also interested in buying the products. Is it a conscious decision to have the products only on women's sections, or could you maybe reach bigger audience by adding these products also to men's categories in e-tailers and retailers?
When it comes to e-tailers where Marimekko products are sold, e-tailers make their own choices when it comes to the categorization. That is their decision on how they categorize or where they place the Marimekko products. When it comes to Marimekko's own e-com, we actually do not categorize our products based on gender. Overall, I have to say that we have been extremely happy to have seen also new customers and also men being excited about our newest collections. For example, the Marimekko Kioski streetwear collection, and we do see that this sort of genderless unisex approach is something that will be a key part of our collections also in the future.
Thanks. There's few questions related to international sales. International sales grew by 20% this quarter. It's a good development, but the person asking the question says that maybe not as good as expected. Were there any special reasons behind this?
Thank you. That is a good question, and maybe I would revert to what I mentioned earlier on in my presentation. When we look at the 20% growth in international sales, I think we at Marimekko are actually quite happy with this development. In the comparison year, the international sales, despite the pandemic, kept pretty flat. Actually, they at that point in time declined only by 3%. If we then compare this second quarter performance of 2021 to the time pre-pandemic, second quarter 2019, actually the international sales growth is 16%. I would say that we are on good track, and it's also good to remember that our international sales are driven by wholesale sales, because that is the business model that we operate.
Are you expecting then higher international sales in the future? What could be the main drivers to increase sales international?
When we look at the big picture of where do we want to go as Marimekko, so definitely our vision is to be one of the world's most inspiring lifestyle brands renowned for our prints and colors. Our focus is now on fueling our long-term international growth. In order to capture these opportunities that we can see opening up for Marimekko due to the changing consumer behavior and the disruption happening in the marketplace, we believe that we can capture those opportunities, especially by investing in our digitality, in the seamless omnichannel customer experience, in brand awareness, and in sustainability.
Has there been increased demand for Marimekko products in APAC region, excluding Japan, for instance, in China or the other countries in the region?
When we look at the Asia-Pacific region, or maybe if we look at Asia more specifically, Japan is still clearly the single largest market in that region, where we have built our network of stores and presence with our current partner for over 15 years. The other markets in Asia are still in relatively earlier stages in development, but those operations are constantly growing. We are very strongly developing our business in the Asia-Pacific region, and that really represents one of our key areas of future international growth.
That would be actually the last question then. How do you see Marimekko's potential in that region in the next couple of years?
When we look at our current presence in the Asia-Pacific region, so the majority of the stores in the Asia-Pacific region or in Asia, in particular, are located in Japan. In the other markets, if we look at South Korea, China, Hong Kong, Thailand, and so forth, we are in, as mentioned, in earlier stages in development. We have already a good presence of stores, but those markets are growing constantly.
From that point of view, we still have a lot of room for future growth. I think that is really exciting because we can definitely see that where consumer behavior overall is developing, preferring brands that have a real story, that are authentic, that have something unique to offer. For example, Marimekko, our recognizable design language celebrating the art of printmaking, that have a sustainable approach to lifestyle overall are really gaining traction. We do see an authentic, unique opportunity for long-term growth in this region.
Thanks. There's actually one more additional question. How much can you control what your wholesalers are selling and the price levels? Marimekko has this distribution model that's selective.
Yeah. When it comes to the wholesalers' pricing, of course, wholesalers, then they are in charge of their own pricing naturally. When it comes to what they are selling, I would say, I think the starting point in everything is what we actually offer. We put all of our efforts into building the most inspiring, relevant collections that speak to the even wider customer audience all around the world. Obviously, with the desire that we are able to cater the channels where we wish to be present, where we believe that our target customer finds it relevant to find Marimekko.
Thank you, Tiina, thank you for everybody participating and with good questions. Wishing you a very good rest of the day.
Thank you.