Source: Inderes & Pinpoint (retail consensus 06.08.25, 57 estimates)

Strong revenue growth despite challenging comparison figures

Björn Borg's Q2 revenue grew by 8.9% in local currencies. However, due to a negative FX impact from a strengthening SEK, reported revenue increased by 6.0% year-on-year to 226 MSEK. Given the challenging comparison figures, we believe the company delivered robust growth, slightly exceeding our expectations and aligning with Retail Consensus (Pinpoint Estimates). The Wholesale segment, the largest contributor, reported strong growth of 9%, reaching 148 MSEK. This performance surpassed our expectations, primarily driven by strong development in the sports apparel category. While revenue in the Own e-commerce segment (Q2'25: 52 MSEK) was broadly in line with our projections, both Own stores (Q2'25: 24 MSEK) and distributors (13 MSEK) underperformed our expectations. The Licensing segment continued to generate modest revenue following the integration of the footwear category, which previously constituted a significant portion of this segment.

Geographically, key markets Sweden and Germany both exhibited strong growth, up 23% and 21% year-on-year, respectively, both exceeding our expectations. Conversely, the Netherlands stood out negatively with an 11% decline, mainly due to a decrease in footwear sales. This was anticipated, as last year's summer collection was distributed in Q2'24 due to delays in the footwear takeover, whereas this year's collection was distributed as planned in Q1'25.

Earnings fell below our expectations

Björn Borg's Q2 gross margin was weak, declining to 50.6% (Q2'24: 51.8%), below our estimates. Adjusted for currency effects, the underlying gross margin was 47.5%. This decrease was primarily attributable to sales through larger customers receiving higher discounts. OPEX grew by approximately 5%, mainly due to increased marketing activities, reflecting an operational cost development broadly in line with our expectations. Despite revenue exceeding our forecasts, the lower gross margin resulted in Q2 EBIT falling below both our and Retail Consensus estimates, reaching only 10.6 MSEK. Consequently, EPS decreased to 0.16 SEK (Q2'24: 0.26 SEK), also below our expectations. This was largely due to the weaker operating result and a negative impact on net financial items, stemming from the Swedish krona's strengthening against both EUR and USD.

In terms of cash flow, Björn Borg generated a positive operating cash flow of approximately 89 MSEK in Q2, consistent with the typical seasonal pattern where the company tends to free up working capital in Q2 and Q4. In our view, the balance sheet remains robust, with net debt/EBITDA at a healthy 0.71x and an equity ratio of 47%, above the target of 35%.

No surprises in the outlook

While Björn Borg does not provide specific numerical guidance, this quarter was no exception. The company reiterated its long-term financial targets of at least 10% annual revenue growth and an annual operating margin of at least 10%. In our view, achieving the revenue growth target will be challenging. While the company has proven its ability to successfully expand the sports apparel category, we would like to see clearer signs of increasing volumes in the footwear segment now that it is fully integrated. However, we believe the company should be able to maintain its margin above target, albeit with short-term fluctuations, driven by strong revenue growth, particularly in the profitable Own e-commerce segment, and some FX tailwinds from a weaker USD.