Paakkanen “shocked” at state of Marimekko

An unexpected twist took place on Friday in ownership arrangements of the textile manufacturer Marimekko. Muotitila, the investment company of Marimekko CEO and main owner, Mika Ihamuotila, did not buy the remaining holding of Kirsti Paakkanen.
     Paakkanen herself finds the situation “shocking”. “It is as if Ihamuotila did not believe in Marimekko”, Paakkanen said by telephone from France.
     
Ihamuotila and Paakkanen had an agreement on the purchase of 804,000 of Paakkanen’s shares. Paakkanen even relinquished the voting rights over the shares in her possession to Ihamuotila’s investment company at the company’s shareholders’ meeting in the spring.
     “This matter has come to me as a complete surprise. I do not know if Ihamuotila took fright at the situation of the world economy, or the state of Marimekko.”
     In the autumn of 2007 Ihamuotila had already bought an equivalent holding of 804,000 shares from Paakkanen. In addition, Ihamuotila bought three per cent of Marimekko’s shares from the work pension insurance company Varma.
     
Hints that there might be problems emerged two days before Christmas when Marimekko issued a profit warning, predicting slower growth in turnover and weaker profitability.
     The weaker-than-expected development in the last quarter was attributed to a sharp decline in Christmas sales.
     “If Ihamuotila cannot handle the situation, I am ready to be CEO. I will not join the board of directors even if they ask me to”, Paakkanen says.
     
Ihamuotila was astounded by Paakkanen’s statement. In his view, the changes on the finance market means that he was not able to get the financing that he needed to buy Paakkanen’s shares. Muotitila plans to remain a key owner of Marimekko shares.
     “I am totally committed to Marimekko as an owner and CEO. I want to develop the company and bring it forward. There have been no changes from my point of view, beyond those that have taken place on the finance market”, Ihamuotila says.
      Because of the economic crisis and the decline in available credit, it is very difficult to borrow money, and the credit that is available is at a high interest rate.
     
Detailed information on the decline in Christmas sales will come when the company publishes its accounts for 2008.
     Keeping Marimekko afloat is a matter of honour for Kirsti Paakkanen. She emphasises that she sold Ihamuotila a debt-free company, which survived the recession of the 1990s.
     
Also announced on Friday was the resignation of the company’s head of marketing, Kirsi Räikkönen.
     Paakkanen admits that her views on marketing have differed from those of Ihamuotila. The extent to which these differences may have affected Christmas sales is something that Paakkanen will not say.
     “He is a banker, who does not understand the clothing trade, or retailing. In marketing, he has not accepted my views”, Paakkanen says.
     “I don’t know yet what I will do”, says Paakkanen, when asked about the future.


Previously in HS International Edition:
  COMMENTARY: Creases in the Marimekko frock (23.12.2008)
  New Marimekko spring patterns: from Keane to Kalevala (16.12.2008)
  Banker confronts challenge of poppy patterns (9.11.2007)
  New Marimekko CEO says serious illness led to change of direction (1.11.2007)
  Kirsti Paakkanen to surrender ownership of Marimekko (31.10.2007)
  Marimekko licensing its patterns to H&M (21.11.2007)

Links:
  Marimekko website