Björn Borg FY15 net sales improve 7 percent
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Business
“In summing up 2015 we can report that Björn Borg improved all the key indicators in the business plan: retail sales, employee engagement, operating profit and revenue,” said CEO Henrik Bunge.
Financial review indicates decline in brand sales
During the fourth quarter, the company’s distributors and licensees mainly in underwear and sports apparel reported lower sales. Total brand sales for the quarter (excluding VAT) decreased by 4 percent and brand sales for the full-year increased by 1 percent. The slower brand sales compared with net sales, Björn Borg said, is due to lower sales by its distributors and licensees. Adjusted for currency effects, brand sales were down 3 percent for the quarter and down 1 percent for the full-year.
Brand sales in the underwear product area for 2015 were unchanged compared with 2014. Sports apparel saw a decrease in brand sales of 3 percent, however increased in the bags product area. In footwear they increased slightly and in eyewear they declined. In total, sales of licensed products rose by 2 percent for the full-year.
Among large markets, Sweden, Norway and Finland saw good growth, while Belgium, Denmark and England retreated. The Netherlands reported only slight changes compared with the previous year. Smaller markets had a tough year and fell substantially year-on-year. Björn Borg has terminated the distribution contract for the Netherlands, Belgium and Luxembourg with the aim of managing distribution of Björn Borg products in these countries in-house.
During the fourth quarter three new stores were opened: one in Sweden in the new Mall of Scandinavia and two in Finland, one in the Helsinki area and one in the Åbo area. Earlier in the year four stores were closed and one was opened. As of December 31, 2015 there were a total of 41 Björn Borg stores, of which 21 are Group-owned.
Financial review of the fourth quarter and FY15
The Swedish underwear wholesale business had another strong sales quarter partly due to expanded distribution to sporting goods retailers and partly to an earlier discount period. The wholesale footwear company was in line with the previous year. The Finnish company reported strong growth in the quarter partly because of two new stores, but the wholesale business grew as well. The British company also saw good growth during the quarter. Group-owned retail sales in Sweden finished at the same level as the previous year, while e-commerce continued to grow. Royalties decreased during the quarter as a consequence of lower brand sales.
For FY15, Sweden posted a positive trend during the year with increases in the underwear wholesale business, e-commerce and Group-owned retail operations. Footwear wholesaling is also growing partly due to the new distribution to the Danish market, though sales are also growing in Sweden. The British and Finnish operations retreated during the year. Royalties increased slightly during the year.
The gross profit margin for the fourth quarter decreased to 51.8 percent and excluding currency effects, the margin would have been about 52.6 percent. Based on the higher sales and despite a lower gross profit margin, operating profit increased to 14.6 million Swedish krona. The gross profit margin for the full-year 2015 was slightly lower than the previous year at 52.4 percent due to currency effects. The improvement in sales led to an increase in operating profit to 58.6 million Swedish krona (69.3 million dollars).
Sales performance of wholesale and retail categories
The Björn Borg Group has global responsibility for development, design and production of underwear and adjacent products as well as sports apparel through Björn Borg Sport. The business segment’s operating revenue saw an increase of 30 percent. External operating revenue increased 2 percent compared with the same period in 2014.
The company is also the exclusive wholesaler of underwear, sports apparel and adjacent products in Sweden, Finland and England as well as footwear in Sweden, Finland, Denmark and the Baltic countries. The business segment’s operating revenue increased by 7 percent in 2015. The British and Finnish operations saw lower sales compared with 2014. The increase in sales for the year was generated by the Swedish wholesale businesses for underwear and footwear.
The Björn Borg Group owns and operates a total of 21 stores and factory outlets in Sweden, Finland and England that sell underwear, sports apparel, adjacent products and other licensed products. Björn Borg also sells online through Bjornborg.com. Operating revenue in the retail segment increased by 25 percent during the year and external net sales rose by 30 percent. The increase is mainly due to continued strong performance in e-commerce, where sales rose by 73 percent. Group-owned stores also developed positively with growth of 13 percent and sales for comparable Björn Borg stores rose by 11 percent year-on-year.