Björn Borg Q4’25 flash comment: Strong earnings growth

Source: Inderes & Pinpoint (retail consensus 05.02.26, 64 estimates)

Björn Borg delivered Q4 revenue that was in line with our estimates, with the sports apparel category continuing to outperform. The clear positive highlight in the report was the profitability that significantly exceeded our expectations, driven by solid cost control. In our view, for the company to achieve higher growth in line with its targets, it needs to lift the shoe category as well, which has so far underperformed.

Solid revenue growth despite challenging comparison figures

Björn Borg's Q4 revenue grew by 5.0% in local currencies. However, due to a negative FX impact from a strengthening SEK, reported revenue increased by 1.5% year-on-year to 238 MSEK. This was in line with our expectations, and given the tough year-over-year comparisons, we believe the company delivered solid growth in the quarter.

By segment, Own e-commerce stood out on the positive side, with Q4 revenue growth of around 24%, above our expectations. While revenue growth in Björn Borg’s largest segment, Wholesale, was in line with our expectations of around 2%, the Own stores and Distributor segments came in below our estimates. The Licensing segment continued to generate modest revenues following the integration of the footwear category, which previously constituted a significant portion of this segment. Geographically, Germany stood out on the positive side, as we had expected, with Q4 revenue growth of around 21%. Also, Finland was strong (25% y/y), which benefited from favorable year-over-year comparisons. The company’s largest market, Sweden, was facing a very tough comparison, as the market delivered 43% revenue growth in Q4’24. Given this, we believe that the revenue growth outcome of around 6% during the quarter was solid.

Operating profit significantly above our expectations

In our view, Björn Borg’s Q4 gross margin was at rather solid levels, increasing to 54.0% (Q4’24: 53.3%), in line with our expectations. In our view, Björn Borg demonstrated very good cost control during the quarter, with operating expenses (OPEX) decreasing by approximately 1%, which was better than we expected. Overall, Q4 EBIT increased from 16.8 MSEK in Q4’24 to 21.6 MSEK in Q4’25, corresponding to an operating margin of 9.1%. This was significantly above our expectations.

FY2025 EPS amounted to 3.66 (FY2024: 2.89), but the company proposed to leave the dividend unchanged at SEK 3.00 per share. While the payout ratio is at high levels, around 82% of its earnings, we believe that it is sustainable given the company’s solid balance sheet and net debt/EBITDA of 0.4x, excluding leases. Over the long term, we expect Björn Borg to continue distributing a large share of its earnings through dividends.

No surprises in the outlook

Björn Borg does not provide specific numerical guidance, and this quarter was no exception; however, the company reiterated its long-term financial targets of at least 10% annual sales growth and an annual operating margin of at least 10%. Before the Q4 report, our FY26 revenue estimate stood at 1,130 MSEK (8.2% y/y growth) with EBIT at 121 MSEK (10.7% of sales). While we expect Björn Borg’s growth outlook to remain good in 2026 as well, supported by our expectation of a gradual recovery in consumer demand, we believe achieving its target of 10% annual sales growth will be challenging. While Björn Borg has successfully expanded its sports apparel category, we would like to see clearer signs of increasing volumes in footwear, which has disappointed our expectations in the latest quarters. In our view, it will take time to significantly grow footwear sales, as the company needs to improve quality, enhance design, and streamline distribution, similar to the transformation seen in sports apparel following its full integration in the mid-2010s. However, we believe that the company’s margin will remain at good levels, on the right side of its target, supported by what we forecast to be solid sales growth, especially in the profitable Own e-commerce segment.