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Björn Borg posts revenue decline in Q3 and nine months

By Prachi Singh

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Business

The Björn Borg Group’s net sales for the third quarter amounted to 203.1 million Swedish krona (22.4 million dollars), a decrease of 1.3 percent, while adjusted for currency effects, sales decreased by 6.1 percent. As of January 1, 2018 footwear distribution in Denmark is managed by a licensee, revenue from which come in the form of royalties, so adjusted accordingly, the company said, sales rose about 1 percent. The group’s net sales for the first nine months of 2018 amounted to 513.1 million Swedish krona (56.6 million dollars), a decrease of 2.5 percent and excluding currency effects, sales were down 5.8 percent. Adjusting sales from footwear licensee in Denmark, net sales fell about 1 percent for the first nine months.

Commenting on the third quarter trading, Henrik Bunge, CEO of Björn Borg said in a statement: “Thanks to a higher gross profit margin and lower costs, we raised operating profit to 37 million Swedish krona, an increase of 16 percent for the third quarter.”

Highlights of Björn Borg’s Q3 and first nine months results

In the third quarter, the Swedish wholesale company, which manages apparel and underwear sales, was in line with the previous year, but with sales in sports apparel distribution growing and sales to traditional apparel retailers declining. The Finnish apparel and underwear company, Björn Borg said is developing well and growing at both the wholesale and retail levels. The footwear wholesale company had a good quarter and grew year-over-year. The Swedish business is generating growth, while the Finnish business is down year-over-year.

Sales for the Swedish retail company grew 1 percent for comparable stores but decreased in total because there were three fewer stores than in the third quarter of 2017. E-commerce grew 51 percent in the quarter. The Benelux business declined 23 percent year-over-year with wholesale and retail sales are both down from the previous year. Comparable stores dropped 6 percent and in total retail sales fell 20 percent. The product company’s external sales decreased year-over-year, driven by the poor performance in the Danish market abd external royalties decreased due to lower sales by licensees.

In the first nine months, The Swedish wholesale underwear and apparel business grew year-over-year by 18 percent driven by higher sales in the customer segment sports apparel distribution. The Finnish company that distributes underwear and apparel declined compared with the previous year. The wholesale footwear business has stopped distribution in Denmark as of January 1, 2018, which is now managed by an external partner, which led to a decrease in net sales of about 10 million Swedish krona. The Swedish, Finnish and Baltic businesses, that still are managed within the Group, saw good growth.

Retail sales in Sweden fell compared with 2017 because there were three fewer stores, while sales for comparable stores rose 3 percent. E-commerce generated growth of 35 percent. The Benelux companies reported a net sales decline of 13 percent compared with the previous year at both the wholesale and retail level. The Group’s own stores were down both in total and for comparable stores. The product company’s external sales decreased year-over-year, driven by poorer performance in the Danish and Norwegian markets and external royalties decreased compared with the previous year.

The gross profit margin for the third quarter increased to 57.7 percent with currencies negatively affecting the gross profit margin. Adjusted for currency effects, the company said, gross profit margin would have been 58.9 percent. Operating profit rose to 37 million Swedish krona (4 million dollars), while profit after tax increased to 29 million Swedish krona (3.2 million dollars). Earnings per share before and after dilution amounted to 1.15 Swedish krona compared to 0.98 Swedish krona.

The gross profit margin for the first nine months increased to 58.1 percent with a strong EUR combined with a slightly weaker USD during the period positively affecting the margins. Adjusted for currency effects, the company added, gross profit margin would have been 56.8 percent. Operating profit rose to 55 million Swedish krona (6 million dollars), while profit after tax increased to 45.3 million Swedish krona (5 million dollars). Earnings per share before and after dilution amounted to 1.81 Swedish krona compared to 1.04 Swedish krona.

Picture:Facebook/Björn Borg

Bjorn Borg