Björn Borg blames shipment delays to Q1 sales decline

The Björn Borg Group’s net sales amounted to 131.1 million Swedish krona (15.8 million dollars) during the first quarter, a decrease of 8 percent. The decrease excluding currency effects was 16 percent. Adjusted for currency effects, quarterly net sales would have been about 121 million Swedish krona (14.6 million dollars), compared with about 118 million Swedish krona (14.1 million dollars) for the first quarter 2014 excluding the delayed shipments.

“For the first quarter of 2015 we are reporting decreases in both sales and operating profit. Our sales are down 8 percent from the same quarter in 2014. The first quarter 2014 however includes about 25 million Swedish krona (3 million dollars) in delayed shipments from 2013, as previously reported. Excluding those delayed shipments as well as positive currency effects we see a slight increase in sales. Our own operations in England and Finland have not delivered as expected, while our own e-com continues to generate good growth,” said Henrik Bunge, CEO of the company.

The underlying Spring/Summer collections in the product companies for underwear and sports apparel generated higher revenue, but with a significant currency component. The British and Finnish wholesaling operations declined slightly during the quarter, as did the Swedish wholesale company for footwear. The Swedish wholesaling operations for underwear posted a decrease due to customer shipments planned in March but delivered during the second quarter. Group-owned retail operations had a very positive quarter and e-commerce reported continued growth.

The gross profit margin for the first quarter increased to 53.6 percent. The wholesale operations were adversely impacted by stronger foreign currencies. Excluding currency effects, the gross profit margin would have been 54.2 percent. Lower revenue mainly in the underwear and sports apparel product companies, combined with higher operating expenses, contributed to a decrease in operating profit to 12.8 million Swedish krona (1.5 million dollars) during the quarter, despite an improved gross profit margin.

The Group consists of a total of 13 companies, nine of which operate under the Björn Borg brand on every level from product development to wholesaling and consumer sales in its own Björn Borg stores. The business segment’s operating revenue amounted to 22.3 million Swedish krona (2.6 million dollars) during the first quarter 2015. External operating revenue increased to 11.5 million Swedish krona (1.3 million dollars), in line with higher brand sales.

The business segment’s operating revenue decreased 1 percent. External operating revenue decreases 16 percent compared with the first quarter 2014, mainly due to the previously announced shipment delays in both product companies in the comparable quarter in 2014. One of the reasons why the year-on-year decrease wasn’t bigger was a significant currency effect, with a stronger US dollar positively affecting sales in this segment. Operating profit decreased due to the lower sales and slightly higher operating expenses.

The Björn Borg Group is the exclusive wholesaler of underwear and adjacent products in Sweden, Finland and England as well as footwear in Sweden, Finland and the Baltic countries. The business segment’s operating revenue decreased by 6 percent during the first quarter 2015. The British and Finnish operations and the Group’s footwear wholesaling all reported slightly lower sales year-on-year.

The Björn Borg Group owns and operates a total of 18 stores and factory outlets in Sweden, Finland and England that sell underwear, adjacent products, sports apparel and other licensed products. Björn Borg also sells online through www.bjornborg.com. Operating revenue in the retail segment increased by 20 percent. External net sales rose by 25 percent during the first quarter mainly due to e-commerce, which continued to grow, although the Group-owned Swedish stores also developed positively during the period. Sales for outlets and comparable Björn Borg stores in Sweden increased by 12 percent year-on-year.

Distributors and licensees saw slightly improved sales in the first quarter 2015, mainly in bags and footwear. As a result, brand sales excluding VAT rose by 3 percent. Adjusted for currency effects, brand sales were down 1 percent for the quarter. Brand sales in the underwear product area improved by 1 percent in the first quarter. Underwear accounted for 52 percent of brand sales. Brand sales of sports apparel were unchanged. In the product areas for footwear and bags, sales increased, while sales of eyewear and fragrances declined. In total, sales of licensed products increased by 6 percent during the first quarter.

Among large markets, every country except Belgium saw growth. Norway reported the highest growth during the quarter. It was a tough quarter for Björn Borg’s smaller markets, where even England lost ground compared with the previous year. No new Björn Borg stores were opened during the first quarter. The former German distributor closed its outlet in early 2015. As of March 31, 2015 there were a total of 40 stores, of which 18 are group-owned.