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Analytikerkommentar

Björn Borg Q1’25 preview: We expect a solid quarter

Af Lucas MattssonAnalytiker
Björn Borg

Q125 PreviewBjörn Borg will report its Q1’25 results on Thursday, May 15. We expect solid revenue growth compared to the same period last year, primarily driven by the integration of the footwear category, increased sales in the sports apparel category, and continued good development in own e-commerce. We estimate a lower gross margin due to a shift in the sales mix, as well as higher operating costs, mainly due to increased marketing activities. However, we believe that the strong sales growth should provide some operational leverage leading to a slight increase in absolute EBIT. Our focus in the upcoming report will be on updates regarding the footwear transition, as well as demand-related information.

Another quarter of good revenue growth

We estimate Björn Borg’s revenue to have increased by a solid 8.5% year-on-year to 279 MSEK, slightly below Retail Consensus (Pinpoint Estimates). By segment, we anticipate Wholesale to show the strongest growth (10% y/y), driven by the takeover of footwear distribution. Furthermore, we expect good growth in the Direct-to-consumer segment (7% y/y), despite tough comparison figures, largely supported by increased sales in the sports apparel category through Björn Borg’s own e-commerce platform and a stable development in own stores. Among the smaller segments, we expect the Distributor segment to grow 8% (y/y) due to more normalized inventory levels and easier comparison figures, while the Licensing segment is expected to continue showing highly negative growth figures following the integration of the footwear category, which previously constituted a significant part of this segment.

Overall, by product category, we expect strong revenue growth in sportswear and footwear, while the more mature underwear category is expected to show relatively flat growth. Geographically, we expect Germany to stand out with high-single-digit growth due to strong sell-through at major e-tailers, while we expect revenue in Finland to decline due to weak underlying market development.

Solid margin despite higher operating expenses and a shift in sales mix

We forecast Björn Borg’s gross margin to decrease to 52.7% from last year's level of 53.1%, due to a shift in sales mix. This shift includes a lower proportion of revenue from the higher-margin underwear category and a higher proportion from lower-margin categories such as sportswear and footwear. On the other hand, we expect reduced discounts within direct sales to consumers, as well as FX effects to have a positive impact. In terms of operating expenses, we estimate an increase due to heightened marketing activities. However, we believe that the strong sales growth should provide some operational leverage leading to an increase in absolute EBIT to 34.4 MSEK (Q1’24:33.5), in line with Retail Consensus.

On the bottom lines of the income statement, we anticipate net financial items to decrease, which were at a high level in the comparison period due to the revaluation of financial assets and liabilities in foreign currency. At the same time, we expect the relative tax rate to be roughly the same as in Q1 last year, resulting in an increase in EPS to SEK 1.03 (Q1’24: 0.84).

We expect stable growth and margins in 2025

Although Björn Borg does not provide financial guidance, we forecast revenue growth of approximately 5% and an EBIT margin of slightly above 10% for 2025. While we expect the operating margin to be on the right side of the company’s long-term target of at least 10% annually, we believe achieving its target of 10% annual sales growth will be challenging. While the company has proven its ability to successfully expand its sports apparel category, more concrete evidence of volume growth in footwear is necessary. The 2024 footwear sales increase was largely attributable to the takeover of distribution outside the Nordics. In our view, significant growth will require time, as Björn Borg needs to enhance quality, design, and distribution, similar to its earlier apparel transformation.

In the upcoming report, we look for any information regarding the development of the footwear transition, as well as comments on the market outlook.

Björn Borg

55,7SEK07.05.2025, 18.00
55SEKKursmål
Akkumulér
Anbefaling opdateret:10.04

Björn Borg operates in the fashion industry and focuses on the design, manufacture and distribution of sportswear and underwear. The company's products are aimed at private individuals looking for comfortable and stylish clothing. The business is global with a main presence in the Nordic region and Europe. Björn Borg was founded in 1984 and is headquartered in Solna.

Read more on company page

Key Estimate Figures10.04

202425e26e
Omsætning990,01.038,31.112,7
vækst-%13,5 %4,9 %7,2 %
EBIT (adj.)101,8108,2118,5
EBIT-% (adj.)10,3 %10,4 %10,7 %
EPS (adj.)2,893,193,50
Udbytte3,003,203,50
Udbytte %5,8 %5,5 %6,0 %
P/E (adj.)17,918,316,6
EV/EBITDA10,210,910,2
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