Earnings call transcript: Bjorn Borg Q2 2025 sees stock rise amid strategic focus

Bjorn Borg’s second-quarter 2025 earnings call revealed a strategic focus on sports apparel and e-commerce, contributing to a 2.78% rise in stock price to 57.5 USD. According to InvestingPro analysis, the company appears slightly overvalued at current levels, though its strong brand positioning and market expansion plans in Germany have sparked investor optimism. The company maintains a healthy financial profile with an overall Financial Health score of "GOOD" from InvestingPro.

Key Takeaways

• Bjorn Borg’s stock increased by 2.78% following the earnings call.
• Strong growth in sports apparel (+45%) and e-commerce (+26%).
• Expansion efforts are focused on the German market.
• Gross margin declined due to higher discounts and product mix.
• Net income decreased due to foreign exchange revaluation.

Company Performance

Bjorn Borg demonstrated robust growth in its sports apparel and e-commerce segments, with sales increasing by 45% and 26%, respectively. The company’s overall revenue growth reached 14.83% in the last twelve months, with total revenue of $100.79 million. The company is focused on expanding its presence in the German market, despite challenges such as declining footwear sales and a tough retail environment. The brand’s consideration has risen, ranking third behind industry giants Nike and Adidas.

Financial Highlights

• Total sales growth: 6% (currency neutral growth above 10%)
• Gross margin: Declined due to higher discounts and product mix
• Operating profit: Slightly increased
• Net income: Slightly declined due to FX revaluation
• E-commerce sales growth: 26%

Market Reaction

Bjorn Borg’s stock reacted positively to the earnings call, rising by 2.78% to 57.5 USD. InvestingPro analysis reveals two key strengths: the stock generally trades with low price volatility, and the company operates with a moderate level of debt. This movement reflects investor confidence in the company’s strategic initiatives and market expansion plans, supported by a strong current ratio of 1.49. The stock’s performance is notable within its 52-week range of 43 to 67 USD. Discover 6 more exclusive ProTips and comprehensive analysis with an InvestingPro subscription.

Outlook & Guidance

The company aims to become a global iconic sports fashion brand, with a long-term goal of reaching SEK 1.5-2 billion in sports apparel sales within existing markets. With a robust gross profit margin of 51.68% and return on equity of 23%, the company appears well-positioned for expansion. Continued investment in e-commerce and brand development is planned, with a significant focus on expanding in Germany. For detailed insights into Bjorn Borg’s growth potential and comprehensive analysis, access the full Pro Research Report available on InvestingPro.

Executive Commentary

CEO Henrik emphasized the company’s strategic direction, stating, "We’re here to build a sports fashion brand." He also highlighted Bjorn Borg’s market share gains, noting, "We are amongst the few ones that actually are gaining market shares and growing top line and actually profit." On the German market, Henrik affirmed, "We are in Germany to stay."

Risks and Challenges

• Declining gross margins due to discounting and product mix.
• Net income pressure from foreign exchange revaluation.
• Challenges in the retail market environment.
• Footwear sales decline, though with potential for improvement.
• Increasing net debt due to e-commerce inventory requirements.

Q&A

During the Q&A session, analysts inquired about pricing pressure and margin management, the impact of currency on gross margins, and the company’s German market strategy. Clarifications were also sought on marketing spend and brand investment approaches.

Full transcript - Bjorn Borg AB (BORG) Q2 2025:

Henrik, CEO, Bjorn Borg: Good morning, guys, and welcome to our Q2 presentation, beautiful Friday. We’re at Gromborg getting ready for the midnight run tomorrow. You should join us if you can. So we’re partnering up with Midnats Lopet. And so tomorrow in Stockholm, more than 30,000 runners will be wearing a beautiful Diva Pink Borg Tee.

And of course, everyone working from Bjorg is doing the run as well. But enough of that. Looking at Q2, I think the clear highlights, obviously, is that our sports apparel and our own ecom is continuing to perform exceptionally well. So ownecom growing 26% in the quarter, benchmarking that against competitors. We’re clearly taking market shares.

The growth is spread across almost all of our markets, so that’s very, very reassuring and of course, a clear sign that the brand is getting stronger and stronger and stronger. And of course, the combination with a very strong product offering, of course, is the reason for this very strong growth. And of course, together with a great team that is managing our ecom business. But of course, I think the highlight that is worth talking about over and over again is our ongoing very, very strong momentum with Sports Apparel, so plus 45% in the quarter. So those that have been following us for a while, you know that this journey was all about taking this very beautiful, strong men’s underwear brand and moving that into a bigger arena, moving into sports, sports apparel, extending the categories and by doing so, growing in our already existing markets.

That was the plan. And we can now conclude that we have 10, perhaps even 11 quarters of very, very strong Sports Apparel growth. So the clear highlight, obviously, plus 45 versus last year in a market that is very, very challenging. And again, these are comp numbers. So it’s not like we have bought something or that we have added something that we hadn’t in the past.

It’s really comparable numbers. So I’m super, super, super proud over that development. And the highlights, of course, we’re continuing to grow our top line, 6%. Of course, I’m not really happy with that. We want to grow even more.

Currency neutral, looking at total sales, we’re actually above 10%, which I think is good in a fairly tough market. It’s driven from wholesale and, of course, own e commerce, I already talked about. Our retail operations, our own stores, of course, is declining because we’re closing down here, but also those that we still have are getting smaller and smaller versus last year. A part of that is actually related to that we got some support last year, a payback from a COVID support back in the days. But nevertheless, on retail, of course, that’s not our focus.

Wholesale and ecom is. Looking at the product categories, of course, Porsa Power plus 45%. Bags is doing really, really well. Underwear is also on a strong growth number. And yes, footwear in the quarter is down, but we just need to remind ourselves that last year in Q2, that’s when we sold almost all of our products the first half year due to the bankruptcy that happened in Q1 last year.

So it’s not really comparable numbers. Nevertheless, of course, we want to see stronger footwear numbers. The highlight, obviously, is that we are still growing very, very good with footwear in our own ecom, which is more sort of comparable numbers. Our gross margin is declining versus last year. And there’s many different reasons for that.

One is that we got a bit of a support last year, so it’s hard comparable numbers. It’s also product mix, also a bit category mix and the country split. And I think we also have to just acknowledge that, of course, we have been a bit more aggressive when it comes to clearance on ownecom to continue to take market shares and drive growth. And that’s also, of course, impacting it versus last year’s same quarter. Profit is increasing, which is fantastic, of course, and we have a very strong financial position, as always.

Our long term goal doesn’t change. So this has been with us and me since I joined Bjorn Borje in 2014. We’re here to build a sports fashion brand. Our long term financial objectives remains the same. And the strategy obviously remains exactly the same.

So really growing the sports apparel business, the footwear business, the bag business and moving us into a bigger arena. That’s clearly the main objectives. And the good thing, of course, is that the brand, one of the things that makes us truly unique is getting stronger and stronger. And this slide probably would be my screen saver for the rest of the year. But when we look at Q2 data from all the markets where we’re measuring this, which is Sweden, Finland, Denmark, Norway, Holland, Belgium.

We ask 400 consumers every week a bunch of different questions. And one of the questions is that out of this list of brands, which would you consider buying? And in Q2, we are, at an average in those markets, number three. So this is absolutely incredible. Thanks, of course, to a great effort from the marketing team, but in combination, of course, with being in the right distribution and creating great products.

So the only ones that are now bigger in terms of people considering buying them is Nike and Adidas. We’re ahead of everyone else. So just hang on to this slide for a while. It’s just very, very beautiful. If we dig a bit deeper into it, you can see that the push in Germany is actually going really, really well.

Consideration for him is also increasing and person intent is also going up. So of course, in this brand track numbers, there’s a number of different KPIs, but the main message is that the brand is getting stronger and stronger every quarter. And of course, that is what we also then see in our e com growth number as one example. The trick has always been how do you maintain a strong underwear position, being the market leader in underwear and at the same time then moving into this bigger arena of sports products. And we can see that person intent is going down a bit versus last year, but still, of course, very, very high on underwear hems.

So we’re maintaining a very strong position. Apparel continuing to be on a very, very good trend. And looking at the top line, as we’ve seen, we want more. But with that said, we have never sold more in Q2. But for the details, I’ll bring in my CFO, Jens.

So listen now.

Jens, CFO, Bjorn Borg: Thanks a lot, Henrik. It’s good to be back from summer holidays. It’s good to be back with Henrik. You’re fired up. Maybe I should print the slide on the brand position and frame it for you.

It’s beautiful. I agree. On the top line, however, we can see that the Q2 is super strong. Never have we had a stronger Q2 in the history of this company. So really proud to see that we’re growing.

Yes, we want to grow more. We want above 10%. 6% is still good in a tough quarter. Breaking it down to the different markets, we can see that in our own subsidiaries, almost all markets are growing. We struggle a little bit in the Benelux, but that is temporary, and it will bounce back.

In terms of the distributors overall, going down. However, our biggest market in Norway is still just above the zero line. If we combine that into our segments or channels, wholesale is growing 9% in the quarter. Here, we can see that the physical doors, the brick and mortar, are growing even 16%, while the online players are fighting a bit with minus 3%. And our own e commerce, you heard from Henrik, is growing 26% in the quarter, super strong, while everyone else is losing market shares, we’re gaining.

Own retail is declining. Comparable stores, meaning the same ones we had opened last year, excluding contributions from any government on COVID, etcetera, it’s minus 6%. So still declining, but not really the focus either, as you heard before. Distributors, minus 11 mainly the some of the smaller distributors have a bit of a catch up to do. If we look at the online sales, and when we talk about online sales, we talk about our own e commerce, obviously, the wholesale e tailers, meaning wholesale partners selling online only, and marketplaces.

Here, we’ve kept track of this for a while, and we can see that it’s going up in absolute numbers and if we compare it to last year, even in percentage of the total sales. As obviously, if we were to see how much of our products are sold on physical players’ own websites, it should be an even higher number, obviously. Breaking down the sales to our categories. You heard from Henrik many times today that sports apparel is up 45% in the quarter, super strong, really comparable numbers as well. So very, very good to see.

But also underwear bounced back. For those of you remembering that Q1 had a timing problem, let’s say, or challenge in the first quarter, it now bounced back in the second quarter with plus 11%. Bags back to growth of 38%. So yes, good to see as well. Looking at the bottom line.

So gross margin is down towards end of the Q2. Mainly, you heard a bit from Henrik as well, but we have the biggest contributor to that is that the large key accounts are taking a bigger share of sales with slightly higher discounts. But also the D2C channel, mainly in ecom, is having slightly lower margins in the Q2. In the operating profit, it’s increasing versus last year slightly, whilst net income is slightly declining. However, this is related to revaluation of FX, revaluation of our accounts as well as some hedging impact that’s impacting us negatively in the quarter.

In terms of the balance sheet, the equities is still strong, very stable, around 50%. Net debt is increasing slightly. We have a slightly higher dividend. At the same time, the ownecom channel is taking a bigger share of sales, requiring higher inventory, requiring that the net debt is increasing slightly compared to previous years. The working capital in relation to the rolling gross sales, we want to be around 20%, slightly up during the Q2, but not alarming.

So it’s 22%. But I think it’s going to keep fairly stable around the 20% line roughly. With that, I’m very happy to be back to work, very happy it’s Friday. Henrik, should you round this up before we go training?

Henrik, CEO, Bjorn Borg: Yes. Good. So thank you for hanging in. A couple of key takeaways. So one, of course, terms of the brands.

We talked about that. The brand is getting stronger and stronger. Of course, that’s our most important asset. That’s what makes us truly unique. The stronger the brand, the bigger the price difference between what it costs to produce a product and what we can actually charge.

So that’s very important, and it’s going in the right direction. Secondly, of course, we have a very, very strong momentum in ownecom, as you have seen. And also, wholesale is doing a very, very good job. Interesting enough, of course, we see that it’s really the brick and mortar that is now growing whilst the e tailers are declining. So even, of course, the retail trend, we continue to believe is going to be fewer and fewer stores.

We see that being where the consumers currently are is, of course, crucial for us. And that means, of course, one big part of our business will still be based on physical retail. And last, of course, in terms of category, very, very strong momentum for sports apparel, that’s fantastic. But also, we see good momentum in underwear currently and bags. When it comes to footwear, well, it’s declining in the quarter, as we said.

Hard to compare because, of course, last year’s number was the full year numbers in Q2. But nevertheless, we have integrated that. It’s a great potential, but of course, there’s a lot of hard work to integrate that and turn that around and make that also contribute to our plans of growing even further. Overall, to summarize the whole quarter, as I said also in my CEO comment, I think it’s a good quarter. It’s not a great quarter.

It’s certainly not a bad quarter. The highlights clearly that we’re growing Sports Apparel, now in e com and wholesale. The more challenging part where we need to dig into deeper is, of course, the margin development but also, of course, the footwear category. But to sum it up, again, a good quarter, and I’m super proud over the team that in a very, very tough market, reviewing some of our competitors, we believe that we are amongst the few ones that actually are gaining market shares and growing top line and actually profit. So I think with that, I’m sure that Jan Marr want to fire in as well.

Jan Marr, Analyst/Interviewer: Yes. Thank you so much. And I guess let’s start a bit with the pricing pressure from the discount that you mentioned. Should this be a concern ahead? Or are you confident that this price pressure that you mentioned is temporary?

What could we expect, I mean, going forward? I mean, looking back, you had quite a good pricing power, I would say. Is this just a temporary dip? Or what’s like the current situation on the pricing?

Henrik, CEO, Bjorn Borg: I think the pricing power is as strong as it has ever been in terms of the brand. But of course, we need to acknowledge what is happening around us. And of course, one of the levers that we can play with is just to increase the margins a bit, being slightly more aggressive with certain product groups, perhaps investing slightly different to continue, of course, to drive growth predominantly in our own channels. So that is really the main thing we see in Q2. So if you want to grow, you need to be a bit agile and finding ways to enable growth.

Still, of course, we want to improve profitability. So if we look at the ecom channel, well, yes, now we are dropping in margins slightly, partly due to increased discounts, partly due to product mix, but of course, also the profit on ecom is increasing. And of course, that’s the balance we want to have because ultimately, of course, it’s all about selling a lot and making a lot of money. What happens in between, less important. That’s sort of our view on that.

On Wholesale, we are focusing on our bigger customers. And the bigger customers buy bigger volumes. With that comes slightly higher discounts. So of course, the evolution, if that continues, is that the discount on wholesale will be slightly bigger simply because we’re selling bigger volumes to bigger customers that have slightly higher discounts.

Jan Marr, Analyst/Interviewer: Yes. Yes. So a little bit in the D2C channels, lower margins to push growth then, at least for the short term being. Is this across all markets, if you look at your own online? Or do you feel this is particularly emphasized in certain markets?

Henrik, CEO, Bjorn Borg: No, but it is a bit differently depending on which market we’re currently in and where we see the traction. So it could vary a bit between some of the markets. We’ve seen currently that the behavior in Germany, for example, they are very, very hesitant. There’s a lot of worries about what’s going on around them, which is also impacting their willingness to sort of spend money. But on the same side, we see that we have a very strong momentum in terms of selling to German consumers.

So that’s actually up 29%, almost 30% year to date, so sold into Germany to German consumers. So that’s a mix, of course, of own ecom and German customers, but still very low volumes. So it’s a bit different depending on market.

Jan Marr, Analyst/Interviewer: Okay. And I know you don’t provide guidance, but if we look ahead, I mean, you have some currency or FX related tailwinds looking into the second half here due to the purchasing terms and so forth. But then also we mentioned some margin pressure here. How should we balance these two items? Are you confident that maybe you could have margin expansion looking ahead?

And how do like the sort of how do these items like counteract each other?

Henrik, CEO, Bjorn Borg: Well, I think the easiest way and of course, everyone listening are very smart and talented people. And as you say, of course, we are purchasing most of our products in U. S. Dollar. We’re selling well, close to nothing in U.

S. Dollar. Well, actually, right now, nothing because we closed down The U. S. Business due to all the stuff that is happening.

So of course, that will have an impact on our gross margin for sure. So it’s simply all about measuring what the currency is currently versus how it was a year ago and then, of course, timing that in when we purchase the stuff, but also, of course, when we sell the stuff. But it’s very, very clear that a weaker U. S. Dollar is something that will help our gross margin.

That’s clear. But it’s also a case where the SEK Europe plays into account. So of course, what we now see with the I wouldn’t say that the SEK is strong, but at least it’s changing a bit in a direction where it becomes a bit stronger, of course, also impact our top line negatively. So it impacts our P and L in many, many different ways. And I think also, not to sort of overcomplicate things, but as we talked about in terms of our financial net, here, we are reevaluating our cash and loans at the beginning of the quarter versus how we are looking at the end of the quarter.

So those fluctuations also will have an impact on most of them, of course, our profit after tax. But so there’s a lot of different things that’s impacting us due to the currency. At least last well, probably a year, it’s been very volatile. So that’s going to make it a bit trickier, of course, for people to see, okay, how is that going to impact the Bjorn Borg business. But from a gross margin perspective, that will definitely have a positive impact, all other things the same.

Jan Marr, Analyst/Interviewer: Yes. Okay. Yes. Thank you. And then on Germany, I mean, you mentioned the development and particularly maybe in Hamburg, which is your focus area here.

Is the German consumer overall, I mean, putting pressure on your sort of development in this region? And how should we look at this, I mean, going ahead? Are you confident that you can keep growing in this pace? Or is this maybe just sort of like a one off?

Henrik, CEO, Bjorn Borg: Well, it’s certainly not a one off. We’re very persistent. So of course, I’ve been doing this now since 2014, and there was many reasons to give up along the way when things didn’t go as planned. So we simply do not give up. And it’s clear, if we look at Germany, that market is as big as all our other markets combined.

So massive, massive potential. With that said, of course, not an easy market. And that’s why we said, let’s aim small. Let’s start with one city and then slowly build a strong community, and that’s what we’ve done in Hamburg. When we look at some of the KPIs, so brand track data from Hamburg or our own ecom into Hamburg, we can see that we are now doubling our sales on our own ecom to people living in Hamburg.

So that’s the quickest growing city now in our own ecom. And of course, that showcase that the investment is really paying off. So we are in Germany to stay. And then, of course, how long will it take until the German business will be a substantial part of our overall P and L? Hard to say because, again, of course, when you look at the P and L, looks like it’s already big, but that’s due to the Zalando business, which is not really to German consumers.

So now we’re trying to build a strong brand towards German consumers. And then Zalando pays a role, but predominantly ownecom is our key channel to win German consumers. And that in Germany is going so far good, and those investments will continue.

Jan Marr, Analyst/Interviewer: Yes. Okay. Yes. Thank you. And you mentioned some I mean, we’ve spoken on the reduced pricing in order to maybe like drive growth ahead.

Maybe that is indicating somewhat the challenges in the market driving growth currently. Considering that, what should we expect in terms of marketing looking ahead? Are you feeling that you have a good yield on the marketing spend right now? And how do you see that developing?

Henrik, CEO, Bjorn Borg: Well, I think we found a fairly good balance. So in terms of how much we need to spend, I would say roughly between 79%. That is what you could expect from a company like this to invest into marketing. And then of course, when you benchmark with other companies, you don’t really know always what they put in, into their marketing working budget, whether it’s showing up elsewhere in the P and L. But I think that’s a good starting point.

And then, of course, out of that big chunk of money, how you spend it is going to be different. And very, very clearly, if we talk about performance marketing, so the stuff that is then driving e com business as one example, that’s very easy to measure. So you know that I put in something here, then this is what I get out. But of course, a big chunk of our marketing is still in formats where the benefit in terms of P and L impact in terms of revenue or profit is it’s hard to calculate. So one, of course, example is Midna Sloppe, the midnight run we do on Saturday, absolutely incredible.

So yes, imagine in the middle of the night, so the more than 30,000 people running in our Diva Pink Bork Tee, incredible. Of course, that’s going have a massive impact for the brand. The event is perfect for us. That’s where people are that are not predominantly runners but that run because they want to do something else potentially. That’s where we want to be.

But of course, if you try to translate that into revenue, then it’s going to be very hard. We don’t know how much stronger the brand will be because we’re there. So it’s not an easy question to answer. Do you get the money back from your investments? I believe we have very strong team in place.

I believe that when we look at the BrandTrack data, us being number three as one example, it showcased that we are spending the money where it needs to be spent to continue to drive the brand. That’s my assessment of it.

Jan Marr, Analyst/Interviewer: All right. Thank you. Thank you. And then finally, on the Sports Development. Naturally, I mean, solid numbers in this quarter.

Like just how far can this reach, do you feel? What are your ambitions looking ahead? And what can you maybe remind us again of the drivers of Sports

Henrik, CEO, Bjorn Borg: So to describe 45% growth with solid, Jallmar, I’m probably more thinking extraordinary. But hey, that’s just me then. No, but again, we believe that sports apparel will be our biggest category. And looking at ownecom, year to date June, it already is bigger than underwear. So of course, that is where we are heading in our mature markets, so without opening up a new market.

So of course, Sports Apparel will continue to grow if things go as planned, more than double digit. I’m sure there will be exceptions here and there because things doesn’t always go as we plan. But of course, that’s where the volume growth, that’s where the big potential is. We can certainly do 1,500,000,000.0, perhaps even SEK 2,000,000,000 in Sports Apparel in existing markets already without that being very strange. And of course, currently rolling 12, we’re just above SEK 300,000,000,000.

So huge potential. But again, it doesn’t always go as we planned. So I’m sure that one quarter will be 45% again, another one perhaps will showcase something else. It’s hard to know. But long term, our view is very clear.

We have not changed our long term ambition, and that is to be a global iconic sports fashion brand. Perfect. That’s clear.

Jan Marr, Analyst/Interviewer: Thank you, Henrik and Jens, for coming here today, and I’ll leave it to you for any concluding remarks.

Henrik, CEO, Bjorn Borg: Yes, thank you. Well, it’s Friday, so make sure you do a bit of a workout. And if you can, I’m not sure if there’s any spots available, you should come and join us for tomorrow for the midnight run if you’re living in Stockholm. It’s going to be absolutely incredible. And actually, our biggest shareholder, Martin Bjoring, is joining as well.

So that’s going to be worth a visit to meet him. So with that said, have a fantastic Friday. We’re happy with the quarter, and I’m just so happy to be back from vacation. Can’t wait to dig in and continue this growth journey with Bjorn Borg. So thanks a lot.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.