Source: Inderes & Pinpoint (retail consensus 05.08.26, 61 estimates)

Björn Borg's Q2 revenue fell significantly short of our expectations, but an exceptionally strong gross margin cushioned the impact on profitability, resulting in an operating profit that only slightly missed our estimates in absolute terms, while growing year-on-year. The 12.2% revenue decline was primarily driven by weak Wholesale sales, largely reflecting a distribution timing effect. In our view, the return to double-digit growth in own e-commerce is a positive development, and we believe the robust margin expansion highlights a favorable channel mix and solid operational execution. Given the lower-than-expected revenue, we anticipate some downward pressure on our near-term revenue estimates, but as Q2 is seasonally the smallest quarter, we do not expect any large deviations to our current full-year estimates.

Steep revenue decline driven by weakness outside own e-commerce

Björn Borg reported Q2 revenue of 198 MSEK, clearly missing our 241 MSEK estimate and representing a 12.2% year-on-year decline. The main explanation for the revenue decrease was weak sales in the Wholesale segment, which the company attributes to timing in distribution. The 2026 summer season deliveries were made in the first quarter of 2026, whereas the 2025 summer season deliveries fell in the second quarter of 2025. While we had anticipated this shift, the effect was much more pronounced than projected, with Wholesale revenue dropping 26% – well below our estimates. Looking at Wholesale sales during the first half of 2026, excluding the timing effect, revenue still decreased by 4%, a disappointing result that implies growth must accelerate if the company is to reach its 10% annual target. Meanwhile, the big revenue highlight in the report was own e-commerce, which came in slightly above our expectations and returned to double-digit growth after a temporary Q1 setback, supported by good momentum in sports apparel.

Exceptional gross margin shields operating profit

The clear positive surprise in the report was the gross margin, which surged to 56.2% (Q2'25: 50.6%), significantly exceeding our 51.0% expectation. We believe a favorable channel mix primarily drove this expansion, as the higher-margin own e-commerce segment accounted for a larger share of total sales amid the wholesale decline. Supported by the strong gross margin, the company delivered an EBIT of 11.8 MSEK, representing an 11.0% year-on-year increase (Q2'25: 10.6 MSEK). Although we consider the margin beat impressive, the absolute EBIT slightly missed our 13.1 MSEK estimate due to the substantial revenue shortfall and lower sales volumes. The company posted an EPS of 0.34 SEK, which also landed below our 0.38 SEK forecast.

Outlook points to a stronger margin profile, but revenue estimates face some downward pressure

Björn Borg does not issue short-term financial guidance. Commenting on the first half of the year, CEO Henrik Bunge highlighted the margin improvements, stating that the company achieved its highest-ever first-half operating profit despite revenue remaining essentially flat, which he sees as clear evidence that the company is building a stronger and more profitable Björn Borg. We do not view the revenue decline stemming from the delivery timing effect as concerning in itself, but we find it slightly concerning that Wholesale revenue declined even when comparing the first half of 2026 with the same period last year to strip out the timing effect, although we acknowledge the tough comparables. Given the lower-than-expected revenue, we anticipate some downward pressure on our near-term revenue estimates. However, as Q2 is seasonally the smallest quarter and own e-commerce continued to perform well, we do not expect any large deviations from our current full-year estimates. In addition, the impressive gross margin development may offer some support to our profitability forecasts.