Björn Borg Q3’25 flash comment: No major suprises

Source: Inderes & Pinpoint (retail consensus 05.11.25, 31 estimates)

Björn Borg delivered Q3 revenue that was only slightly below our estimates in absolute terms. While operational cost development was solid, the marginally lower revenue also led to Q3 operating profit coming in just below our expectations. Overall, the sports apparel category continues to outperform, but for the company to achieve higher growth in line with its targets, it needs to lift the shoe category as well, which has so far underperformed.

Good revenue growth despite challenging comparison figures

Björn Borg's Q3 revenue grew by 7.2% in local currencies. However, due to a negative FX impact from a strengthening SEK, reported revenue increased by 5.2% year-on-year to ~300 MSEK. Given the tough year-over-year comparisons and the challenging market environment, we believe the company delivered solid growth, albeit slightly below both our forecasts and Retail Consensus expectations.

By segment, Wholesale stood out on the positive side, with revenue reaching a strong 218 MSEK, representing 10% year-on-year growth. This was roughly in line with our expectations and was primarily driven by physical stores in wholesale operations. While revenue in the Own e-commerce segment (Q3'25: 52 MSEK) was also in line with our estimates, both Own stores (Q3'25: 24 MSEK) and distributors (Q3'25: 9 MSEK) underperformed our expectations. The Licensing segment continued to generate modest revenues following the integration of the footwear category, which previously constituted a significant portion of this segment. Geographically, we had previously observed stable trends in the underlying clothing markets in Sweden and the Netherlands during Q3. As expected, this was reflected in strong Q3 results in these markets, where Sweden grew 13% and the Netherlands grew 5%. Another key market, Germany, had a significantly weaker quarter compared to our expectations and decreased by 23% y/y. Worth noting, however, is that the company faced very challeging comparsion figures in the German market.

Operating profit slightly below expectations

In our view, Björn Borg’s Q3 gross margin was stable, increasing to 52.5% (Q3’24: 52.1%), only slightly below our estimates. However, the gross margin was significantly supported by positive effects from FX tailwinds, adjusted for FX effects the gross margin decreased from 51.2% in Q3’24 to 49.9% in Q3’25. The decline in gross margin was mainly driven by a higher share of sales to larger key accounts with higher discounts. We also believe that the company's focus on growth continues to be reflected in lower gross margins to increase market shares and drive growth. Operating expenses (OPEX) grew by approximately 4%, mainly due to increased marketing activities, reflecting an operational cost development slightly better than our expectations. Overall, Q3 EBIT increased slightly from 42 MSEK in Q3’24 to 45 MSEK in Q3’25, corresponding to an operating margin of 15.3%. EPS (Q3’25: 1.47) beat our expectations mainly due to lower net financial items.

Operating cash flow stood at -76 MSEK YTD (-68 MSEK), primarily reflecting higher capital commitments related to the integration of the footwear business. However, this outcome aligns with our expectations. Nevertheless, we anticipate stronger operating cash flow by year-end, as Björn Borg typically reduces working capital requirements in Q2 and Q4. Net debt/EBITDA remained stable at 1.2x, and the equity ratio stood at a solid 51%, well above the 35% target.

No surprises in the outlook

While Björn Borg does not provide specific numerical guidance, this quarter was no exception, the company reiterated its long-term financial targets of at least 10% annual sales growth and an annual operating margin of at least 10%. Before the Q3 report, our FY25 revenue estimate stood at 1,058 MSEK (7% y/y growth) with EBIT at 110 MSEK (10.4% of sales). With Q3 revenue slightly below our expectations, we still view it as challenging to reach 10% sales growth for the full-year. While the company continues to proves its ability to successfully expand the sports apparel category, we would like to see clearer signs of increasing volumes in the footwear segment now that it is fully integrated. However, we believe the company should be able to maintain its margin above target, albeit with short-term fluctuations, driven by strong sales growth, particularly in the profitable Own e-commerce segment, and FX tailwinds from a weaker USD.