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Björn Borg posts loss in its second quarter of 2019

By Prachi Singh

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Management

The Björn Borg AB group’s net sales amounted to 141.7 million Swedish krona (14.7 million dollars) in the second quarter, an increase of 1 percent, while adjusted for currency effects, the company said, sales fell 2.2 percent. The gross profit margin for the quarter decreased to 55.4 percent compared to 59.9 percent in the previous year, while operating loss was 1.7 million Swedish krona compared to operating profit of 2.9 million Swedish krona in the previous year. The company reported loss after tax of 2.3 million Swedish krona against earnings of 1.5 million Swedish krona, while earnings per share before and after dilution amounted to negative 0.09 Swedish krona.

“I admit we had a weak quarter. The second quarter is historically our weakest quarter from a profit perspective and this year we also face positive exchange rate effects compared to last year. My aim is always that every quarter will be better than the same one in the previous year. That is not the case with this year’s second quarter, said Björn Borg CEO, Henrik Bunge in a statement.

Header 2 Björn Borg’s second quarter results

The company added that positive sales trend compared with the second quarter of 2018 is largely due to increased net sales in the wholesale footwear business in the Netherlands and Belgium, which grew 40 percent. Adjusted for currency effects, sales in the Netherlands and Belgium rose 34 percent.

The Swedish wholesale business reported growth of 6 percent , while the Finnish wholesale business fell 63 percent in the quarter after the company decided to terminate its collaborations with several customers whose work was not aligned with the brand’s future direction. The German wholesale business grew 8 percent year-over-year.

Sales for the Swedish retail company increased 1 percent, while total sales fell 4 percent. E-commerce grew in the quarter by 8 percent, with the biggest year-over-year increases in website traffic and orders. The retail companies in the Netherlands and Belgium decreased compared with the previous year, with comparable stores declining 1 percent, while total sales in the Netherlands and Belgium fell 7 percent. The retail company in Finland saw an increase of 9 percent for comparable stores, while total sales were in line with the previous year. The store in England grew 4 percent compared with the previous year.

The company’s external sales rose year-over-year, mainly driven by the Norwegian market’s improved performance, while external royalties decreased slightly in the quarter, driven by lower licensing revenue from footwear.

Profit after tax amounted to SEK -2.3 million, compared with a profit after tax of SEK 1.5 million for the same period last year. Earnings per share before and after dilution amounted to SEK –0.09.

Header 3 Highlights of Björn Borg’s first half

The group’s net sales for the first half amounted to 329.9 million Swedish krona (34.2 million dollars), an increase of 6.6 percent, while excluding currency effects, sales rose 2.9 percent. The company said, positive sales compared with the first half of 2018 is largely due to increased net sales in the wholesale footwear business, which grew 5 percent.

All markets except Finland saw growth, with the German market reporting an increase of 43 percent. The markets in the Netherlands and Belgium also grew, with combined growth of 16 percent. The Finnish market fell 26 percent. Sales for the retail company in Sweden fell by 10 percent in total due to fewer stores. Sales for comparable stores were also down, losing 3 percent, mainly due to lower foot traffic. Net sales for the retail stores in the Netherlands and Belgium fell by 6 percent in total, also due to fewer stores year-over-year. Adjusted for currency effects, sales for comparable stores in the Netherlands and Belgium would have decreased 4 percent. The Finnish retail company saw a sales drop of 7 percent year-over-year, while sales for comparable stores rose 1 percent. Sales for the retail company in England increased 15 percent. E-commerce saw growth of 13 percent, with better conversion of website traffic than the previous year.

The company’s external sales increased year-over-year, driven mainly by a positive trend in the Norwegian market and external royalties increased due to higher licensing revenue from footwear.

The gross profit margin for the first half-year decreased to 56.2 percent compared to 58.3 percent. Operating profit for the half year amounted to 16.9 million Swedish krona compared with 18 million Swedish krona for the first half of 2018.

Picture credit: Facebook/Bjorn Borg

Bjorn Borg