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Björn Borg witnesses strong Q4, FY14 net sales up 9 percent

By Prachi Singh

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Business |REPORT

The Björn Borg Group’s net sales amounted to 135.3 million Swedish krona (16.1 million dollars) during the fourth quarter, up 36 percent. Excluding currency effects, the increase was 29 percent. The Group’s net sales for the full year 2014 amounted to 538.8 million Swedish krona (64.4 million dollars), an increase of 9 percent. Excluding currency effects, sales rose by 6 percent.

The Swedish wholesale company for underwear had a good quarter and saw increased sales, while the wholesale company for footwear declined slightly. The British and Finnish wholesaling operations performed positively. The Group-owned retail operations reported a slight decline during the quarter, while e-commerce developed very strongly. Total royalties increased slightly as a result of higher brand sales during the quarter. Previously announced shipment delays at the turn of 2014 in the underwear and sportswear product companies raised sales for 2014 by about 25 million Swedish krona (2.9 million dollars). Stronger foreign currencies also contributed to higher sales during the year.

For the year as a whole, revenue in the two product companies including currency effects explain a significant share of the increase. The British and Finnish wholesaling operations developed positively during the year. Sales of underwear and footwear decreased during the year, with tough market conditions leading to declining collections primarily in fall 2014. Group-owned retail sales declined, while e-commerce continued to perform strongly. Royalties decreased as a result of lower brand sales during the year.

The gross profit margin for the fourth quarter improved to 54.1 percent compared to 52.2 percent, partly due to higher margins in the sportswear product company and the Swedish underwear wholesaling company. Excluding currency effects, the margin would have been 55.1 percent. Despite higher operating expenses during the quarter, a higher gross profit led to an increase in operating profit.

The gross profit margin for the full-year increased to 52.9 percent against 51.5 percent last year. Excluding currency effects, the margin would have been 53.2 percent. The sales increase and improved gross profit margin during the year, coupled with slightly lower operating expenses, explains the improvement in operating profit, which rose to 56 million Swedish krona (6.7 million dollars). The operating margin was 10.4 percent.

Sales by distributors and licensees in the product areas underwear, sportswear and bags improved in the fourth quarter. Footwear and the smaller product areas fragrances and eyewear reported declines during the quarter. Total brand sales (excluding VAT) rose by 3 percent for the fourth quarter, but decreased by 6 percent for the full-year. Adjusted for currency effects, brand sales were unchanged for the quarter and down 9 percent for the full-year. Brand sales in the underwear product area fell by 4 percent for the full-year. Underwear accounted for 61 percent of brand sales. Brand sales of sportswear declined by 12 percent. Sales also decreased in footwear, bags, eyewear and fragrances. In total, sales of licensed products fell by 9 percent for the full-year.

Among large markets, Belgium and Finland saw good growth during the year, while the Netherlands, Sweden, Norway and Denmark reported declines. Among Björn Borg’s smaller markets, England posted good growth numbers. During the fourth quarter a third store was opened in Helsinki, Finland. The Norwegian distributor opened two new stores in Oslo. As of December 31, 2014 there were a total of 41 Björn Borg stores, of which 18 are Group-owned.

Bjorn Borg