Björn Borg reports 6 percent drop in Q3 net sales

Group’s net sales for the third quarter from July to September 2016 amounted to 180 million Swedish krona (19.6 million dollars) in the third quarter, a decrease of 6 percent. The company said, excluding currency effects, sales decreased by 5.6 percent. The downward sales trend compared with the same quarter last year, Björn Borg said was partly due to the earlier shipments of the fall/winter 2016 collection, which reduced Q3 sales by about 7 million Swedish krona (0.7 million dollars). Adjusted for these shipments, net sales were down 2 percent in the quarter.

“The high point of the quarter was our work with consumer tests, where the end consumers who tested our functional underwear without exception wanted to buy them,” said CEO Henrik Bunge in the company statement.

Detailed financial review of the third quarter

The company attributed sharp fall in product companies’ external revenue to the earlier shipments and lower comparable sales to external distributors. The decrease was significant in all distributor-driven markets, although Norway accounted for the largest drop in percentage terms. In the Group’s own markets, most companies grew their sales during the quarter, with the Finnish company and wholesale apparel company in Sweden seeing the highest quarterly growth.

Growth was still driven by broader distribution of the underwear product category, but also by a higher number of stores in the Finnish market. The wholesale footwear company grew slightly, while England lost ground year-on year. The Swedish retail company’s sales grew by 7 percent in the quarter, driven by a larger number of stores and a larger share of discounted sales. Sales for comparable stores fell by 3 percent. Ecommerce saw continued growth, but at a slightly slower rate than the previous quarter, and rose by 6 percent.

A new Björn Borg was opened in Finland in the third quarter, while two were closed in Sweden. As of September 30, 2016 there were a total of 39 Björn Borg stores, of which 20 are Group-owned.

Highlights of the nine-month performance

For the nine-month period, from January–September 2016, the Group reported net sales of 460.2 million Swedish krona (50.3 million dollars), an increase of 9.1 percent. Excluding currency effects, sales rose by 9.7 percent. The company said, positive sales trend compared with the previous year was mainly driven by the Group’s own sales at the wholesale and retail level.

The product companies’ external distribution revenue decreased significantly from the previous year. Norway and many smaller markets accounted for the decrease. Benelux fell slightly, while Denmark grew year-on-year. All Group-owned wholesale and retail companies raised their sales significantly compared with the previous year. The increases in Sweden, Finland and England were mainly due to broader distribution of underwear through sporting goods retailers, but also to growth from existing customers. The footwear wholesale company is growing partly due to the new Danish distribution rights, but also through new and existing customers in Sweden.

The Swedish retail company also witnessed growth mainly in ecommerce, but also in brick-and-mortar sales owing to a larger number of stores. Sales for comparable stores fell by 2 percent in the first nine months.

Sales performance of segments

The brand segment’s operating revenue amounted to 65.5 million Swedish krona (7.1 million dollars) in the first nine months of 2016. The Björn Borg Group has global responsibility for development, design and production of underwear, sports apparel and adjacent products. The business segment’s operating revenue decreased 6 percent. The company attributed the decrease to a weak Norwegian market, where the distributor is adjusting inventory by selling off older merchandise, and because distributors in smaller markets are greatly reducing their purchases or have been terminated. Benelux decreased slightly, while Denmark grew year-on-year.

Wholesale segment’s operating revenue rose by 31 percent. External operating revenue was up 34 percent. Growth in the segment came from every market, mainly in underwear and footwear. In the case of underwear, it was partly driven by broader distribution to sporting goods retailers, but also by existing customers. For footwear, growth was partly due to the new distribution rights in Denmark as of July 1, 2015, but also because the Swedish business growing from new and existing customers.

The Björn Borg Group owns and operates a total of 20 stores and factory outlets in Sweden, Finland and England that sell underwear, sports apparel, adjacent products and other licensed products. The company also sells online through Bjornborg.com. Operating revenue in the retail segment increased by 26 percent in the first nine months and external net sales rose by 23 percent. The increase was due to growth in e-commerce and brick-and-mortar sales, mainly as a result of a higher number of Group-owned stores. E-commerce sales increased by 31.2 percent. Sales for comparable Björn Borg stores rose by 2 percent year-on-year.

Picture:Björn Borg