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Björn Borg announces interim update, Q2 sales fall by 8 percent

By FashionUnited

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REPORT_ The net sales of Björn Borg amounted to 97 million Swedish Krona

(14.1 million dollars) during the second quarter ending June 30, 2014 , representing a decrease of 8 percent. The decrease excluding currency effects was 10 percent. The quarterly sales decrease has been attributed to lower sales of the summer collection and the current Fall/Winter collection of underwear and sportswear compared with the previous year.

The Group’s net sales in the first half ending June 30, 2014 amounted to 239.8 million Swedish Krona (34.8 million dollars), representing an increase of 1 percent. Excluding currency effects, sales were unchanged. Shipment delays at the turn of the year in the product companies for underwear and sportswear have increased sales for 2014 by about 25 million Swedish Krona (3.6 million dollars), while the declines for the summer and Fall/Winter 2014 collections have contributed negatively to the first half-year’s sales.

“During the second quarter we and our distributors experienced continued tough market conditions, particularly in our larger markets. On the positive side, our operations in Finland and England continue to perform well. At the same time we have good cost control. Now I look forward to working with the team at Björn Borg to set a clear direction and to increase our focus on consumers,” opined Henrik Bunge, the new CEO of Björn Borg.

The Swedish wholesale company for underwear saw lower sales, partly as a result of delayed shipments until the third quarter. The British and Finnish wholesaling operations continued to perform positively, while the Swedish wholesale company for footwear had another tough quarter. The Group-owned retail operations reported a decline during the quarter, while e-commerce continued to develop strongly. The gross profit margin for the second quarter improved slightly to 52.5 percent. Excluding currency effects, the margin would have been 52.7 percent.

The declines are partly due to the developments in the Netherlands, but also because Norway and Denmark reduced their preorders for both of these collections. For the first half year as a whole, revenue in the two product companies still increased compared with the same period in 2013. The British and Finnish wholesaling operations continued to perform positively, while sales for the Swedish wholesale company for footwear decreased during the first half-year.

Group-owned retail sales saw a slight decline, while e-commerce continued to perform strongly. Royalties decreased as a result of lower brand sales during the period. The gross profit margin for the first half-year increased to 52.7 percent. Excluding currency effects, the margin would have still been 52.7 percent.

Distributors and licensees continued to report weak sales in most product areas during the second quarter 2014. As a result, brand sales (excluding VAT) decreased by 9 percent for the second quarter and by 11 percent for the first half-year. Adjusted for currency effects, brand sales were down 12 percent for the quarter and 13 percent for the first half-year.

Brand sales in the underwear product area fell by 12 percent in the first half-year. Underwear accounted for 59 percent of brand sales. Sportswear saw a decline in brand sales similar to underwear. Sales also decreased in the eyewear and fragrances product areas, while sales of luggage & bags and footwear were relatively unchanged. In total, sales of licensed products fell by 8 percent during the first half-year.

Among large markets, Belgium and Finland saw good growth, while other large markets – the Netherlands, Sweden, Denmark and Norway – reported declines. Among Björn Borg’s smaller markets, England posted good growth numbers. No new Björn Borg stores were opened during the second quarter. As of June 30, 2014 there were a total of 38 Björn Borg stores, of which 17 are Group-owned. The smaller number of stores year-on-year is due to the previously announced retail reconstruction by the Dutch distributor, which has closed 19 stores since June 30, 2013.

Bjorn Borg